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.