That would kinda depend on what you mean by a file, and which backend you are using.
For example, if you're using etcd then the size of each record is limited to about 1MB. If just want to store the file contents of something like a configuration file, then yes, you can store a files *content* in etcd and use confd to use that with a very trivial template. etcd/confd won't know anything about the meta-data of a file (eg. permissions), just the file contents. Any permissions would be set in the confd configuration (in the TOML), and not in the backend content (unless you store that in a separate etcd key, for example). You wouldn't use etcd for files such as installers.