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The total number of trains and road vehicles allowed per company in one game is arbitrarily limited to 80, ships to 50 and planes to 40. These limits are "soft" limits, meaning that they are enforced by counting the trains and making sure you don't have too many. The "hard" limit is 255-15=240, which cannot be exceeded because of the way consists are numbered. The soft limit is probably only there for performance reasons, or maybe a silly design decision.
With this switch, each company can have up to 240 trains, planes, ships and road vehicles of its own.
Note that the total number of schedule orders is not increased, nor is the total number of customised consist names. There can in total only be 5000 orders, which in the default configuration translates to 20 orders per consist. However, if you set all limits to 240, you can on average only have about 5 orders per consist, including the "End of orders" markers. An individual consist can have up to 25, but then some have to have less than 5. The game will not allow to have more, so that you might run out of orders instead of trains.
The same limit applies to the consist names, but it is not as important, unless you can't live without your trains all having their own name. The maximum total number of custom strings is 500; this includes manager's name, company name, custom vehicle type names, signs etc.
This switch is reversible, and only applies to new vehicles. If you turn it off while you have 150 trains, you will still be able to keep those, but you won't be able to buy any new ones.
Note that on the command line you can specify the values for all switches at once using -trpb 240 for example.