You're on the right track. There are two limits, the hard limit, and the practical limit. The hard limit is the maximum size of a file on your file system divided by the record size. Note that in this formula, the record size would include any per-record overhead like seperators or id numbers or whatnot. Since most OSes support single file sizes into the gigabytes or more, this limit isn't a big deal unless you're storing lots of data.
Now, the practical limit is how big can you make it before you have performance issues that would be better addresses by giving up and letting a real RDBMS do the job.
The practical limit is set by the method you decide to use to access the flat file. If you are going to read it into memory and play with it, the practical limit is tha maximum amount of memory you have or that your OS will let you have. While this method of access is very fast as long as the whole structure can fit in memory, the second it gets too big and starts to get swapped out it will have a very poor performance curve. I.e. it'll be dog slow. 😉
If you use random access to the file blocks, then the performance can be just as good as a database, if you know where you're going. I.e. if you have indexing in place your performance can be quite good.
Note that there are many simple indexing methods, like the one MySQL uses, isam (indexed sequential access method by the way).
P.s. do you know why the . is supposed to go inside the ) at the end of a sentence like this: ). ? Originally it didn't, it went after it like this: ).
But, with the advent of the printing press, the . key would often be followed by a space, and it was no uncommon to have the . and the space either get switched, or bump out of alignment and no one could see it until after they'd set up the printing press and done a trial run. The reason was that these two characters were both "short". i.e. they didn't go from the top to the bottom of the characaters next to them. So, a . next to a space was found to be unstable. To fix this problem, the folks who ran the printing press changed the ). rule to the .) rule and it became the "normal" way of doing it.
Odd to think that in this day and age how we order the . and ) is still based on a piece of machinery that now lives quietly in a museum, or the back office of some old printing shops...