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Because SMS is literally re-using bits dedicated to confirming that your cell phone is available for voice connections. There is a designed-in priority that has no room for expansion (since voice has priority in that scheme). To make your SMS connection look like it can handle stuff like photos, it uses the data connection as a side-band ("MMS") and sometimes that fiction falls apart and the photos don't come through with the sms it was supposed to be linked up with.
SMS riding signalling side-channels is stuff from the old 2G days.
Current 4G and 5G connections just use normal IP protocol to handle it, no re-use of protocol bits any more.
So it's not a scarce resource at all by now...
Also, MMS is increasingly a thing of the past, too. Most operators have already switched it off by now where I live.
And sms limits are from the old days. I have no idea where would have sms limits, unless it’s a third world/developing country.
Huh? It’s not reusing bits. It’s using unused bits from the connection protocol. That’s why Asian countries have a smaller character limit. There’s zero reason whatever cell provider OP is talking (probably European) about couldn’t make it unlimited.
I think the smaller character limit comes in from Asian countries if they don’t use the basic Latin characters that came out of ASCII. But yes, there’s no reason for the service provider not to offer unlimited SMS messages other than greed/lack of competition. I remember over 20 years ago reading a high level phone company employee talking about how the SMS plans were basically printing money for the phone companies because it cost them almost nothing in terms of bandwidth, utilizing an otherwise unused part of the connection protocol. Back then most companies charged for the messages as in @OP’s question, and the plans were relatively expensive. Nowadays most plans I see in the US and Europe offer unlimited talk and text, or limits that are so high they would be hard to reach. I think it’s a combination of competition and smart phones offering SMS alternatives that offer more functionality while using a tiny fraction of your data allowance, or none if you’re on WiFi.