I doubt it even went that far - given the size the story mentions (500,000 characters, but isn't clear if they tried smaller), my thinking is the programmer didn't make any checks whatsoever and just thought "no one will type in crazy-large values here, and even if they do it'll just truncate on display" (if that) without consideration on how it might affect memory.
Another team that didn’t read nor adapted practices from About Face : on interaction design. What the team wants is irrelevant, how the user will adopt it is important, and for that you need to actually do tests.
"Why not 1023?"
"Even 1023 is too long, I don't think anyone would need that."
"What if <long and convoluted use-case>?"
"How about 32?"
Having been in a few meetings that went in that direction, I am not surprised that they couldn't agree on a limit. "Design by committee" at its worst.