The Twitter rebrand continues to raise the limit for group chat; users can now participate in private DM groups up to 256.
The new limit, according to a post by X Engineer Enrique Barragan, will now allow an additional 56 people to join your maxed out DM groups.

X is trying to enhance its options in chat with emerging engagement trends.

X had increased the member limit for group chats to 100 people last June and then further to 200 in August. Now, it is expanding this with the intent of providing comparable options with respect to chat options like other apps.

For comparison:

WhatsApp has the ability to add up to 1024 people in a chat group.
Messenger also allows the facilitation of group chats with up to 250 people.
Only 101 Snapchat members can be supported at a time within the group.
Although a major thrust is on Discord, which enables much wider group conversations in the form of broader servers. Theoretically, one can host up to 25k people at one go in Discord servers, although the actual group limit varies depending on several factors. But the conceptually, X is moving toward the possibility of hosting broader group discussions like this, and again, considering the nature in which social interaction is going to evolve, could be a worthwhile upgrade.

Over the past few years, ever-increasing volumes of the "social" components of social media applications-that is, human-to-human-interaction-have gone dark, as fewer people are updating their social feed and increasingly prefer to share updates with smaller, closed sets of friends rather than a whole universe.

Reasons may include negative reactions to some of those old social media posts, increased divisions and angst during post discussion, and burnout due to everyone having to make everything a public spectacle, as if everything you do has to also be "content" for your feeds.

Those forces have led to more people just not posting, and the services themselves are increasingly embracing entertainment-based approaches rather than engagement- and interaction-focused elements.

As such, all services now need to offer more DM options, and through better DMs - including audio and video calls, as well as enclosed topic Communities - X is also looking to align with that shift.