There are separate limits on authenticated smtp sending (via Outlook, Thunderbird, etc) and web server machine email sending (using php's mail function, direct pipe to sendmail, Pine, Mutt, etc). There are limits on both and the limits are set system-wide and can be adjusted on a per-user basis. The limits have become a necessary evil to help us fight spam emanating from our servers. Currently website users are allowed 200 emails per hour (that's per user, not per website), but that is subject to change (as are any of our policies).
The limits on the web server email sending were put into place first to fight spam coming from exploited web accounts. The attackers hijack email scripts or get access to the website through an exploit in software on the website. This still happens many times a day but the damage is now significantly reduced.
The limits on the authenticated smtp were put in place due to malicious people signing up for accounts and sending out spam directly. They all use stolen credit cards and sign up with fake information and generally use AOL accounts (though we have seen others). We can't just block all AOL users from sending email through our servers, unfortunately, though it has definitely been considered.
One key piece of information here is the limits are set per user so they can be adjusted if there is sufficient need for that. We're not trying to prevent you from running your website.
These limits are in place to safeguard our network as much as possible from being blocked by other email providers and also to protect your accounts from being hijacked and used to send spam. It's much better for everyone involved for a hijacked account to only send out a few hundred spams instead of tens or hundreds of thousands.
- Dallas - DreamHost Head Honcho/Founder
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