In this question, someone is asking how to tag more than 50 people in a picture. He even has a link to someone who has done it.
I can only tag up to 20 people.
How are some people able to tag more than 20 people?
You can status tag up 10 users.
You can location tag up to 20 users.
You can photo tag up to 50 users.
You are talking about different things.
I assume you are talking about the location tag.
As always with actions that only one user is able to accomplish but the masses cannot; it's best not to try to attempt it. The correct answer is: it is not possible to tag pass the limit. And if it is possible you put yourself in the "might get blocked/banned from Facebook for crossing some abstract clause in the Facebook TOS" boat.
As for the reasoning for the limits comes down to distribution. You are using a hammer to fry your eggs. In most cases, these actions come from users trying to promote an event, spammers or an irrelevant photo of a cat/cartoon/joke.