Titanium backup history setting ignored
Short answer

I'd say everything is working as expected, just your interpretation of the "88 backups" is wrong :)

Explanation

Titanium Backup doesn't make "one huge backup file covering all", but creates one set of backup files per app (usually 2 files: the .apk and the app settings as .tar.gz), plus one set per system data type (call logs, SMS, WiFi APNs, contacts, and such).

So the message "88 backups" is a bit misleading here: you should read that as "88 backup files" (which again would not be correct, as it rather means "88 objects" here; hard to find a proper term for this message: had you set a backup history limit of 2, and 2 of your apps had 2 backups, it would report "90 backups" here).

You can check this out yourself when investigating the backup directory using e.g. a file explorer: Navigate to /storage/emulated/legacy/TitaniumBackup (which should correspond with sdcard/TitaniumBackup and check the files therein. Naming convention is each file starts with the corresponding package name of the app, followed by either a time-stamp or a corresponding HEX string, and ends with either .apk or .tar.gz.