Why would they put any kind of a limit on it?

All AWS accounts have a "limits" which have the default limits as to how many instances that you could launch in that region.

The reason is so if you fuck up a scaling script for example you can't launch 1000 machines and take all the capacity and then bitch that you won't pay for it.

It's a stop gap.

However, aside from the hard limit of 100 S3 buckets, all other limits are configurable at the request of your AWS rep

It looks like that hard limit became a soft limit in August:

https://aws.amazon.com/about-aws/whats-new/2015/08/amazon-s3...

Hmm... I didn't know this. The last time I asked they said it would never happen. I was told the original reason was that all buckets had to have a unique name

I thought that too but I successfully raised our limit after they made it a soft limit, so give it a shot!

because they can only put these into racks so fast

And to prevent a run-away script from suddenly spooling up thirty of them. Besides issues with their hardware capacity, they're generally pretty good about refunding mistakes like that, so they're eating the cost...