Well, yes, sort of. When mapping properties to labels, labels up to the chosen number are created if they do not already exist. E.g. if the mapping is applied to a node with one label but the mapping's label number is ten, then nine new labels are created for that node. Eight of those will be empty (and thus invisible). Especially empty edge labels are bad, because they have a rather strong, bad impact on the result of layout algorithms (at least for those algorithms that handle edge labels). And since empty labels are notoriously hard to notice and get rid of, it was decided to limit the number of labels.
The file format does not impose the same restriction, because only very few people will attempt to edit property mapper configuration files manually and if you do so, then you definitely do not accidentally create too many labels. (Or rather if you create many empty labels, you do so on purpose.)