Logic of Maximum Message Limit in Alert run option

Summary:

Can anyone please confirm the logic behind the "Maximum Messages Limit" setting under Alert Template Run option.

For instance, if I set the limit to 500, does that mean the alert will send up to 500 unique emails and ignore any additional matches beyond that, even if more records meet the criteria?

Also, considering we have a large population, what would be the impact on system performance if we don’t set a limit or set it to a negative number? Would it potentially cause performance issues?

Thanks
Neha