Obviously you can split your code into many files in a way that obfuscates the workings of the program pretty much comoletely. And I think you can write a single 10kloc file that is so well organized that it is easy to read. I just never have seen one...

I believe that files offer one useful level of compartmentalizing code that makes other people easier to understand what is going on by just looking at the file structure before opening a single file. The other guy can't grep anything before they have opened at least one file and found some interesting function/variable.