On http://www.wikitree.com/wiki/Community_Membership we say you can have up to 5,000 people on your Watchlist. But there are actually no specific limitations. Just practical limitations.
Keep in mind that there's no "your tree" or "my tree." WikiTree is our tree. We all share it. Ultimately, we will all connect. So I guess you could say you can have billions of people on your tree.
You can't have billions of people on your Watchlist because you couldn't manage them all. The ones you don't care so much about would crowd out the ones you do care about. You wouldn't be able to keep up with Trusted List requests, messages from other users, and merge proposals.
With more than a few thousand on your Watchlist, some of the bulk management tools start to break down. There will be too much data going back and forth and everything will become very slow. After about 5,000, we can't guarantee they'll work at all.