Thanks. We've improved the error message in v4.2:
Atlas region is outside the atlas page image: Items/axe2
Image file: Stick_New.png (4096x4096)
Region: 2095,3457 (675x287)
If you look in the atlas file with a text editor:
xy: 2095, 3457
Your image is 2048x2048 so it's impossible for a region to be completely outside the image. This must be the wrong image for the atlas.