Also there is a report about Illustrator falling back to the initial font size when scaling a text over the maximum value: https://illustrator.uservoice.com/forums/601447/suggestions/42111295
While the limit is obviously a legacy thing, that behaviour is not.

'Volunteer lawyer' :D
I like that!
Sadly, I am not 15 anymore. And surely I am not going to persuade anybody it’s OK to have this limit. I just know why it exists.

If you write about a problem in any Adobe product, Adobe will never fix it. Adobe never listens we poor vassals. Also if you write more about it on forums, volunteer lawyers of Adobe (They are usually 15 years old) come and snap at you.
At the end;
This 1296 pt restriction is ridiculous, yes. So, Adobe will not change it.
Case closed.

@Egor: You’re right that 1296pt is a legacy limitation.

I see what’s happening: the Characters palette allows larger sizes to be typed in; however, it silently changes it to 1296 pt. I hadn’t noticed that, which is why I assumed it was accepting larger sizes.

I have voted the 333657 feature request; please close this ticket as a duplicate.

Yes, this is an intended limit for text size.
That’s PostScript limitation, as far as I know.

There are many requests to make it bigger, like the one for InDesign — https://indesign.uservoice.com/forums/601021-adobe-indesign-feature-requests/suggestions/31850848-please-allow-font-size-larger-than-1296-pt, or this one for Illustrator — https://illustrator.uservoice.com/forums/333657/suggestions/31773148.

Vote there, if you want to.

Resizing a text frame using Resize tool or scripting API fails to resize the text within that frame if the resulting text would be greater than 1296 pt. This bug affects both the manual Resize tool and the scripting APIs (both `resize` method and `size` property).

To reproduce, create a text frame containing text at 129.6pt. Select it, then double-click the Resize tool and enter 1000%. This works correctly. Undo, then repeat for 1001%; this time the frame resizes but the text does not.

Using the equivalent JSX, the following fails to resize the text:

app.activeDocument.textFrames[0].resize(1001, 1001)

Setting the text size directly also fails:

app.activeDocument.textFrames.getByName('script 2').characters[0].size = 1297

Error 8753: invalid text range

This restriction can sometimes be tied to the font and not so much Illustrator. To circumvent this I usually keep an editable version of the text off the artboard and then outline a second version so that I can scale it to the size needed. This way you have editable text if you ever need it again and scaled to the size you need.

I need to make the type bigger than 1296pts, but it will not let me. I would like to see a bigger restriction or no restriction.

In times of 4K/8K productions, a typesize restriction of 1296pt is ridiculous
Why is there even a restriction? This doesn't make any sense!

Now i have to convert the text to shapes and
i'm screwed when the client wants any changes.

Adobe has a limit on text height of 18 inches (1296 PT). With live text (not at outlined) at that maximum height, scaling produces unpredictable results.

The text reacts like a rubber band and snaps into some random size while displaying no change in the fonts size. If scaling above the maximum height the user should get an error message and the text should go back to it original size.

It seems the limitation of the drawing area are buggy at best but random results are never good.

Adobe could fix this if they removed the limitations of the Drawing area.

If this is in the wrong place please let me know.