Does anyone have any suggestions? I don't understand why Azure adds these arbitrary container limits.

The container limits in Azure's backup and replication solutions, such as the 100-container limit for Vaulted Backup and the 1000-container limit for Object Replication, are not arbitrary, It is based on a combination of technical, scalability, and performance considerations that Microsoft has designed into the platform.

I agree Gaurav Mantri's comment, you can use Multiple Azure Storage Accounts to Stay Within Azure Limits for Backup.

• You can segment the users or data logically and using multiple storage accounts is a solid strategy for managing Azure Blob Storage backups while adhering to the container limits.
• if you have 1,500 users and wish to utilize Vaulted Backup, you could create 15 storage accounts, each containing up to 100 containers, ensuring compliance with Azure's limits while maintaining a logical structure for your data.
• Same as for Object Replication, you can replicate data across up to 1,000 containers for disaster recovery purposes.
• You can automate the backup process, consider using Azure Automation, Azure Functions, or Logic Apps.

The above approach balances scalability and compliance without requiring a complete restructuring of your system.

Reference:

• Overview of Azure Blobs backup - Azure Backup | Microsoft Learn
• Configure object replication - Azure Storage | Microsoft Learn