My perception of limiting editions, and this may be a bit blunt, is that it adds a bit of snob appeal in the market place. As George said, this may be mostly due to pandering to the buyers.
Michael Smith's practice seems more pragmatic. Print the negatives up to a certain number, that number being whatever is practical for the photographer, then define the edition size on that basis.
Temper my comment with the fact that I have yet to sell a print.