In password security, the longer the better. With a password manager, using more than 24 characters is simple. Unless, of course, the secure password is not accepted due to its length. (In this case, through STOVE.)
Possibly indicating cleartext storage of a limited field (which is an absolute no-go), or suboptimal or lacking security practices.
The cap should actually be due to the hashing algorithm. Every password should be the exact same length once it is salted and hashed, so the actual length of the password doesn’t make a difference in regards to database size. The hash will be a set length, so the storage requirements will be the same regardless. Hashing algorithms have a maximum input length. IIRC the most popular ones return a result of 64-255 characters, and cap at 128 characters for input; Even an input of just “a” would return a 64 character hash. But the salt is also counted in that limit. So if they’re using a 32 character salt, then the functional cap would be 96 characters.
Low character caps are a huge red flag, because it means they’re likely not hashing your password at all. They’re just storing them in plaintext and capping the length to save storage space, which is the first mortal sin of password storage.
You can easily get the hash of whole files, there is no input size constraint with most hashing functions.
Special password hashing implementations do have a limit to guarantee constant runtime, as there the algorithm always takes as long as the worst-case longest input. The standard modern password hashing function (bcrypt) only considers the first 72 characters for that reason, though that cutoff is arbitrary and could easily be increased, and in some implementations is. Having differences past the 72nd character makes passwords receive the same hash there, so you could arbitrarily change the password on every login until the page updates their hashes to a longer password hashing function, at which point the password used at next login after the change will be locked in.