A velocity limit for a stepper motor is essentially a top speed that is set by a user beyond which the motor will not go. Why is this useful? Mainly because stepper motors have a speed where a resonant frequency is reached and may cause it to vibrate. This can cause the motor to become unstable and overshoot position. It is also what causes it to lose torque, sometimes quite rapidly.
Other factors impact stepper motor torque as well. A stepper motor’s low-speed torque varies directly with current. How quickly the torque falls off at higher speeds depends on a number of factors such as the winding inductance and drive circuitry including the drive voltage.
Setting a velocity limit will prevent the stepper motor from stalling. This is because as speed increases in a stepper motor, torque decreases. Velocity limits can be set on the stepper driver or controller.