One likely reason for that limitation is it roughly correlates to the maximum message length for IRC. It's no good having a 20,000 character variable and trying to /msg someone with it because it simply won't work. Remember that at the end of the day it's a scripting language for an IRC client, not a general purpose programming language.
Actually, the max length of a line that can be sent in mIRC is about 440 characters.
qwerty seems to be onto the reason. the other 84 characters might be used for the length of the variable name.
There may be a way to increase the length, but it could be a limitation that I might have to put up with.