You more than likely have a large amount of information in your database. This is simply a security measure, to prevent someone (or yourself) from DOSing your computer. The majority of MPD users won't try loading a 10,000 song playlist, much less displaying it in any kind of interval. If you would like to do this (not recommended for internet connected MPD users) you need to set max_playlist_length to a higher limit. For example, if I have 32,000 songs in my playlist, I would set it to 32768.
It may also happen if you're trying to add a lot of songs at once (via mpc in a script or something). Increasing max_command_list_size and max_output_buffer_size (possiblydoubling them) may help.