The limitation applies to all messages processed by Exim, both incoming and outgoing. Messages with to many recipients are denied outright--there is no partial delivery.
I agree that this setting is becoming less relevant as a SPAM deterrent. A year or three back, it used to offer some safeguard back against exploits of Matt's FormMail and later Cpanel's own FormMail scripts (anyone who doesn't know what I am talking of, are probably new in the hosting business
). These days I use this restriction as a tool to manage the mail queue--I find messages with bad addresses in the CC and BCC to hang around the queue all too often. Limiting the number of recipients has mitigated this problem significantly.
Chirpy, I have so often read your postings--you have a wealth of experience and do not hesitate sharing it. It is nice to answer your question for a turn