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This is "by design", provided as a way to help keep exported paths less than 260 characters (which is the effective limit for Windows).
Windows technically supports creating paths up to 32K in length, but most Windows applications (including Windows Explorer!!) do not. This makes 260 characters the maximum path length for all practical purposes.
You can verify this by attempting to create a file with a path longer than 260 characters with Windows Explorer...
All of this highlights another advantage to keeping your files in an Ultra Recall Info Database (this limitation on names, and "paths" is eliminated). Of course, as you point out, exported Info Item name's are truncated (as explained above) to workaround Windows limitations.
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