I’d never heard of Mastodon, but you made me curious. From what I could gather each Mastodon server is hosted on its own - physical or virtual - server. If physical there will be capacity limits. If virtual, the hosting site may be able to keep expanding the capacity but will charge $$$ for it. So the idea that a server might not be adding new participants could be a reflection of such constraints.
On the other hand, the concept behind Mastodon seems to be to have multiple somewhat independent groups, rather than one huge group. So a limit could just as easily be a matter of wanting to keep the group on a server to a manageable size for philosophical reasons, or perhaps to avoid an administration nightmare.