Entity Limit
For reasons of memory allocation, there is a limit to the number of entities Source can manage at once.
The combined size (in bytes) of a map's entity data should also be considered, even if the number of entities is within safe limits. Large amounts of entdata can take a noticeably long time to transmit from server to client, and may lead to crashes.
Tip: When creating very large or detailed maps, remember that more entities will exist at runtime than were compiled in. Things like weapons held by characters, projectiles and death ragdolls are all entities too. If you see "no free edicts" errors then you need to start cutting!
Source limits
There can be up to 4096 entities. This total is split into two groups of 2048:
- Non-networked entities, which exist only on the client or server (e.g. death ragdolls on client, logicals on server).
- Entities with associated edicts, which can cross the client/server divide.
- In
Garry's Mod, there can be up to 16384 entities, split into two groups of 8192. - In
Portal 2, there can be up to 8192 entities. - In
Counter-Strike: Global Offensive, and 
Team Fortress 2, the limit is the default of 4096.
If the game tries to assign a 2049th edict it will exit with an error message, but if it tries to create a 2049th non-networked entity it will merely refuse and print a warning to the console. The logic behind this may be that an entity spawned dynamically (i.e. not present in the map) but not assigned an edict probably isn't too important.
The two entity lists are created by CBaseEntityList::CBaseEntityList() using NUM_ENT_ENTRIES and MAX_EDICTS. Neither of those values can be changed without breaking compatibility with the engine.
Tip: Temporary entities and static, sprite_clientside, or detail props do not count toward either limit.
Tip: If you're creating lots of individual objects all the time, consider rolling them all into a single manager entity.
Tip: In-game, use console commands like report_entities and cl_showents to get an idea of how many entities are present at that current state.
Tip: Prop entities that use a model with $collisionjoints will generate one phys_bone_follower for every convex piece of their collision model. These can quickly eat up the edict count! Enabling the "Disable Bone Followers" keyvalue on the prop will disable bone followers, although the prop will no longer have a functioning collision model, and the model will not be able to ragdoll.
VMF Limits
Hammer itself has no entity limit, but VBSP's is 8192 (16384 in 
Alien Swarm, 2048 in Counter-Strike: Global Offensive).
Note: This is a soft limit; a modded VBSP is capable of adding as many entities as memory allows.
This is double the combined total accepted by the engine, which may be because it at first treats internal entities (such as prop_static and env_cubemap) like normal entities, or perhaps because it generates a lot of detail props.
VBSP also recommends an entdata size limit of 384KB, but this is in no way enforced.
Source 2 limits
In Source 2, specifically 
S&box, networked entity limit is 16384.
There appears to be no limit for map compiles, or it is tied to the networked entity limit.
