In this context, yeah, I just mean "exceed." I'm not talking about bugs or odd behavior.
I find it an odd system for a few reasons. For one thing, it's inherently biased in favor of the enemy: When the cap is exceeded, they get to deploy more ships, while the player can deploy fewer. There can easily be 4-5 entire rows of enemy ships joining in. This is on top of the fact that in theory, two or three large enemy fleets could combine by proximity, whereas the player only has one fleet. Yet, the game is designed such that there are massive NPC fleets roaming around. Designing the game in such a way that players can run into situations that neither the game engine, the physical reality of the battlefield (wrecks everywhere!), nor most computers could properly handle is a bit strange.
Then again, it can be good to push the envelope. Personally, I love wreckage-strewn battlefields. They're annoying, but humorous.
If there must be a deployment limit, surely it should be divided between both sides equitably (say, 250 deployment for each side), or at least something approaching equitably, like 300:200. Barring that, why design the game around fleets so massive that the cap is necessary in order to prevent the game from grinding to a halt? Clearly though, you have your reasons, and know the game a lot better than I do. I just find it all a little odd, though vanilla 0.8.1a at the maximum battle size setting does seem to work fine in all but the most outlier situations.