We display 200-300 items in the dropdown list. The current limitation is based on our support for old browsers like IE8 and IE9 in the webform. As we still have to support these browsers in the webform embed we cannot use the same picker to select items as via the regular web version of Podio. We hope to add improvements to this in the future (when support for IE8 and IE 9 is no longer needed).
//Sara - Podio