Your tag line says that you are running macOS 26.0. That is only in developer beta – not even public beta – and we are not allowed to discuss it here, except to tell you how to remove it.
For people running who are running macOS Sequoia, the Sequoia version of Access your music library on all your devices - Apple Support says
"Your music library can keep the following available in the cloud:
Up to 100,000 songs, not including songs (or music videos) purchased from the iTunes Store; files can be no larger than 200 MB"
…"
So there is an overall limit. I will also note that the second screenshot said "up to 50,000 songs per playlist." Most people do not create playlists containing tens of thousands of songs, and it may simply be that there is a very large limit on the number of songs per playlist, one that most people would not encounter in practice.