It's not really about batch sparging or fly sparging. It's about water volumes and solubility.
Think of it this way - You've got a pint glass of warm water (this represents your total water volume - mash+sparge). Take 2 tablespoons of brown sugar and dissolve it in that water. If you work at it, stir it, let it sit, stir some more, you can most or just about all of it in solution. That represents a smallish beer, say 4% abv. Now take another pint glass of warm water and dump a 1/2 cup of brown sugar in it and try to dissolve it.
You'll dissolve a lot more in that second glass just because of the greater volume of sugar, but you will leave far more undissolved brown sugar in the bottom of that pint glass. That's efficiency (or lack thereof). How would you get that extra sugar in solution? You'd add a whole bunch more hot water, that's how. You may or may not remember learning about solubility in elementary school, but at a given temperature, water will only accept a finite amount of dissolved solids. Since we can't really mash or sparge at higher temperatures, we've got a hard ceiling for SG at 170 degres. I'd guess it's somewhere around 1.085 judging by the first runnings coming off most beers.
Fly sparging can get you a couple extra points just by the way of dilution over time, but overall if you are making a BIG beer like a Barleywine or RIS, etc, you need to increase sparge water to give the sugar somewhere to go. This of course, results in a longer boil to get rid of all that excess water.