lakshya
By "soft" I mean that the limit is not explicitly 250 users and you might be able to exceed that limit, but it is not officially supported by us, as stated in our ToS (yet we won't block it). FreeFlarum is a free service and if you want to have a busy forum, it might be best for you to just self-host it. FreeFlarum's mission is to support starting communities and therefore our intentions are not to support high-traffic forums at the moment.
A soft limit means they will not actively block further sign ups. You can and are allowed to have more than 250 users. What this means is that if your community is so active that it requires too much from the server (where all FreeFlarum communities are running on), they have a way to ask you to migrate away.
Yes, also that. If your forum will eg.: have a high traffic, also slowing down other forums, we will kindly let you know about this and ask you to migrate away. With the intention to support starting communities, we also offer you an option to download all of your data in the database + avatars at your forum and move on.