IIRC the limit is set by a structure in LS's core. Internally LS will work with lengths up to about 4096 characters, but the buffer for passing the bang message between processes is much smaller. I don't think there's any particular reason for it to be that small but changing it would cause compatibility problems.

Of course the other thing is the max command line length imposed by Windows, I don't remember if it's short or insanely long...