In rally1.rallydev.com, on the Test Case Steps editor screen, when I enter a large block of text, I encounter this warning.
That is fine. I knew I was experimentally pushing the boundaries...
I have stripped out all formatting; I have removed special characters (that might need additional characters adding to 'escape' them or similar); I have ensured that I am in a 'clean' new Step with no inaccessible/undeletable hidden characters hanging over from my previous editing, and it seems that I can only enter approx 1600 'real' characters (including spaces) before hitting this limit.
That is fair enough, but any explanation of those 400 characters -- or however many characters might be unaccounted-for with different content -- would be valuable to me.
These articles also have more information and ideas on how to troubleshoot this: