The microcontroller LUA nodes already have a 1,000ms maximum execution time, the 4,096-character limit seems more of a hindrance than any benefit to the game. While it shouldn't be removed completely, it should be raised substantially.
Perhaps 16,384, or at least 8,192 characters.
Code in the LUA nodes should be readable, both for the person who made/maintains it, and users who download it, so they can learn from it or adapt it. With the 4-096-character limit, people are forced to minify code*, use variable names that are poorly named, use "clever" one liner snippets that are far harder to understand than their multi-line equivalents, not comment their code, and do other things that are generally bad practice or a hindrance to maintainability and readability.
Example LUA style guides: 1, 2, 3.
*I'm aware that Pony IDE can un-minify. New players wanting to learn won't be.
Another negative of the character limit is that more complex creations might end up splitting their code to multiple LUA nodes. Communicating between one and other, but not necessarily waiting for each other. This adds additional load and maximum execution time to the logic that could be in a single LUA node.
Please increase the limit.