This update is designed to improve org health and performance by restricting the number of inactive picklist values in a custom picklist field. The panel on the Picklist Settings page in Setup that provided the option to remove the upper bound on inactive picklist values was removed.
Where: This change applies to Lightning Experience and Salesforce Classic in all editions.
When: This change was announced in Spring ’23 and is enforced in Summer ’23.
How: Now that this panel is removed, you can’t remove the upper bound on inactive picklist values, and the maximum number of inactive picklist values for unrestricted picklists is 4,000. Any new unrestricted custom picklists have a limit of 4,000 inactive values. Any unrestricted custom picklists that were previously created that have more than 4,000 inactive values remain unchanged.
Limit the Number of Inactive Picklist Values (salesforce.com)