If you put the following formula into a cell and then copy the cell contents to another cell using copy/paste value it works fine:
="a"&REPT(CHAR(10),253)&"z"
You will see an "a" followed by 253 line feeds and a "z" in the cell.
However, if you use the following formula, it does not display the final "z" character, rather, it displays a gray box for the "z" character when you drag over the cell contents. The gray box is actually the "z" character but it is not displayed correctly:
="a"&REPT(CHAR(10),254)&"z"
Any value over 253 causes this behavior.
In effect, this means Excel has a limit of displaying only 253 line feed characters in a cell. This limit is not documented in the Excel specifications and limits page: https://support.office.com/en-us/article/Excel-specifications-and-limits-1672b34d-7043-467e-8e27-269d656771c3.
The behavior occurs at least on Office 365 Home (Excel 2016) and on Excel 2013 running Windows 10 and may occur on other versions of Windows and Excel.
A case has been opened with Microsoft Support.
No work around exists, other than to copy the "gray box" area and paste it to another cell to view it.