I suspect that they may decrease the quality of player models when the number of models on screen starst slowing down the game. If each player normally has X triangles to render, so 400 players have 400X triangles, it might reduce it to 200X at the cost of lower quality graphics.

They've also siad, though, that they wanted the number of models to scale with the performance of the machine, so they'll probably just set it to display as many as it can without slowing down the game too much, and the converse is true: when hardware becomes faster, 400 is a possibility