According to this blog post, the Mastodon character limit is fairly baked in;
These edits must be performed by an instance administrator with access to the server hosting the Mastodon software. This is an instance-wide setting that requires direct edits to the Mastodon software files and applies to all users on an instance.
In other words, this is something the Mastodon devs have consciously decided to discourage, by not providing a convenient way to change it in the admin settings, or at least not covering it in their documentation (that I can find). Given that Mastodon is one of the few (if not the only) fediverse servers that has a default character limit, I guess the idea is that if you don’t want it, you can deploy something else.
But that blog post provides instructions for how to change or remove the limit, last updated in 2022.
