For chapter markers, you'll need to switch to QuickTime as the file format for your H264 exports. When exporting to a QuickTime wrapper, Chapter Markers will be embedded and show in video player applications that support QuickTime chapter markers like QuickTime Player.
File size is a direct result of the bit rate settings, but bit rate needs to be high enough to maintain good puncture quality. For standard definition frame sizes like 480p, 5 Mbps works well. For 720p or 1080p, 8 Mbps to 12 Mbps works well. For 2160p, 35Mbps to 40 Mbps works well. If your CPU suppors Intel QuickSync hardware encoding for H264, that can result in much smaller files - especially if using still images.
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