How to increase the character limit for post name of 200?

It happens because when you save a post, WordPress calls sanitize_title function to sanitize your title. This function applies sanitize_title filter.

One of core hooks for sanitize_title filter is sanitize_title_with_dashes function, which checks title on utf8 format by calling seems_utf8 function and if the title has utf8 format, the function call utf8_uri_encode function.

utf8_uri_encode function receives two arguments: $utf8_string and $length. The first one is your title and the second argument is the length, which the title shouldn’t overflow.

sanitize_title_with_dashes function passes your title with limit of 200 characters long. So if you want to change the limit you have to change standard hook for sanitize_title filter. Here we come to a bit dirty solution, but however it should help you:

// first of all lets remove standard hook
remove_filter( 'sanitize_title', 'sanitize_title_with_dashes' );

// add our custom hook 
add_filter( 'sanitize_title', 'wpse8170_sanitize_title_with_dashes', 10, 3 );
function wpse8170_sanitize_title_with_dashes( $title, $raw_title="", $context="display" ) {
    $title = strip_tags($title);
    // Preserve escaped octets.
    $title = preg_replace('|%([a-fA-F0-9][a-fA-F0-9])|', '---$1---', $title);
    // Remove percent signs that are not part of an octet.
    $title = str_replace('%', '', $title);
    // Restore octets.
    $title = preg_replace('|---([a-fA-F0-9][a-fA-F0-9])---|', '%$1', $title);

    if (seems_utf8($title)) {
        if (function_exists('mb_strtolower')) {
            $title = mb_strtolower($title, 'UTF-8');
        }
        $title = utf8_uri_encode($title, 1000); // <--- here is the trick!
    }

    $title = strtolower($title);
    $title = preg_replace('/&.+?;/', '', $title); // kill entities
    $title = str_replace('.', '-', $title);

    if ( 'save' == $context ) {
        // Convert nbsp, ndash and mdash to hyphens
        $title = str_replace( array( '%c2%a0', '%e2%80%93', '%e2%80%94' ), '-', $title );

            // Strip these characters entirely
            $title = str_replace( array(
            // iexcl and iquest
            '%c2%a1', '%c2%bf',
            // angle quotes
            '%c2%ab', '%c2%bb', '%e2%80%b9', '%e2%80%ba',
            // curly quotes
            '%e2%80%98', '%e2%80%99', '%e2%80%9c', '%e2%80%9d',
            '%e2%80%9a', '%e2%80%9b', '%e2%80%9e', '%e2%80%9f',
            // copy, reg, deg, hellip and trade
            '%c2%a9', '%c2%ae', '%c2%b0', '%e2%80%a6', '%e2%84%a2',
            // grave accent, acute accent, macron, caron
            '%cc%80', '%cc%81', '%cc%84', '%cc%8c',
        ), '', $title );

        // Convert times to x
        $title = str_replace( '%c3%97', 'x', $title );
    }

    $title = preg_replace('/[^%a-z0-9 _-]/', '', $title);
    $title = preg_replace('/\s+/', '-', $title);
    $title = preg_replace('|-+|', '-', $title);
    $title = trim($title, '-');

    return $title;
}

As you can see we use completely the same sanitize_title_with_dashes function with one change: instead of passing 200, we pass 1000 as the limit for title.