Restricting the size of a password is an attempt to save storage space. It pretty much indicates that your password is being stored plainly in their database, so they want to restrict its size. Otherwise it's just a restriction because the implementors don't know any better. Either way it's a bad sign.
You might want to contact the admins of the site and ask them about it. They should be storing hashes, not passwords, which are always the same size no matter how big the password is. There really should be no limit to the size of password you enter, nor the domain of characters you're permitted to input.
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