According to a recent post in the official blog of Live Mesh, the following is a quick summary of the upper bounds the team has tested.

• Size of  all contents in a single Live Folder is 10GB (however there's still the 5GB quota which limits how much you can synchronize with Live Desktop)
• Individual file size: 2GB
• Items (file or folders) per Live Folder: 100,000
• Members per Live Folder: 200
• Number of Live Folders per user: 200
• Number of devices per user: 100

Below is the limitation of the file format.

• files leading by ~
• desktop.ini
• thumbs.db
• hidden files
• Windows system folder
• desktop folders (e.g. C:\Users\[myusername]\Desktop in Vista, or C:\Documents and Settings\[myusername]\Desktop)
• files and folders in portable desk

A (potential) good news is that Live Mesh team has promised the exceeding of these boundaries in a visible future.

Enjoy~