I didn't look into this and don't know what really happened, but I can guess.
It's more likely a tradeoff. Either you set this limit and protect your service from an identified scalability limit with the current architecture, or you plan for a (possibly long and expensive) redesign to get rid of this bottleneck.
My guess is that a group of SRE and devs identified the risk, listed their options, evaluated the impact on users (eg: which fraction of users have more than 5M files) and assumed that the change would be mostly unnoticed and that the error message would be enough to push users with more than 5M files in their drive account to do some cleanup.
This group of people underestimated the impact and maybe chose to not involve product managers. It's also possible that the decision was rushed because of recent layoffs or any other random event which pushed engineers to act quickly.
With the bad press, leadership got involved, decision to rollback was taken. In my team, we would have a retrospective doc to discuss the issue (not exactly a postmortem, as this process has specific requirements which would not be applicable to this case).
I think this is a easy mistake to do even with very good intentions, and I can see myself doing it.