Part of the reason for limiting the total number of lots is to limit the total number of sims placed in the world.
Housed sims are not culled. Favourite Sims are not culled. Played Sims are not culled. Only homeless, unfavourited, unplayed Sims are culled (to the max number in Options.)
Every Sim has info/stats/personal inventory. Every household has info/stats/household inventory.
All this sim info slows down the game as it needs to be accessed when those Sims spawn in each neighbourhood, when they are contacted off screen, met/socialised with at school/work, gifted items/cash and when any time an action changes their info in any way.
By limiting the number of lots, the devs are limiting the number of uncullable sims/sims relationships/sim inventories etc.
It's purely performance related.
