The maximum area of a rectangle that inscribed in a circle is equal to the area of square whose diagonal length is $4$ unit.
Let the side of square be $x$ unit.
$\therefore \,\,\,\,(4)^{2}=x^{2}+x^{2}$
$\Rightarrow \,\,\,\,2 x^{2}=16$
$\Rightarrow \,\,\,\,\,x^{2}=8$ sq unit