According to Apple, raising this limit allows developers to "provide a more complete, rich user experience upon installation."
Developers can get around the maximum app size by offering separate download packages once the app has been installed, but this method is clumsy compared to the one-click download offered by the Apple App Store.
And this is the size of the compressed binaries as downloaded from the App Store. The app can be much bigger once it has been uncompressed and installed.
The app download limit over the cellular network remains fixed at 100MB.
While owners of high-capacity devices will no doubt rejoice at being able to experience richer apps, spare a thought for those folks on 8 or 16 gigabyte iPhones and iPads (yes, Apple still sells the iPhone 5c with 8GB of storage). While 8 or 16 gigabytes of storage might be fine for developers as a test device, corporate or BYOD users who know they're not going to need much storage, or for people who just don't bother with apps, for everyone else, these low-capacity devices are a bad idea. The 8GB option barely gives users enough space to upgrade iOS without deleting all their content.
Apple has also announced a new feature called TestFlight Groups, which allows developers to better organize app testing using external testers.