Password length versus hash length? If a system hashes passwords with a 256-bit long hash, are passwords (which are not necessarily alphanumeric, can be any value per byte (0-255)) longer than 32 bytes useless under the context in which an attacker with a VERY fast machine brute forces passwords?
The entropy of passwords is not universally distributed. So hashing can be used to concentrate the input of a hash.

The concentration of entropy from another source is called extraction by HKDF, which is a key based key derivation function (which should not be used for passwords). This is from the introduction of RFC 5869, which defined HKDF:


  Thus, the goal of the "extract"
     stage is to "concentrate" the possibly dispersed entropy of the input
     keying material into a short, but cryptographically strong,
     pseudorandom key.


Now the problem with passwords it that they usually does not contain enough entropy or randomness. The size of a password is an important part of estimating the strength of a password. If a password has enough entropy then you could even use a KBKDF such as HKDF or a hash directly. But the table on the same Wikipedia page shows that you would need 20 fully random printable ASCII characters to accomplish a 128 bit security level.

Instead what is used is a Password Based Key Derivation Function or PBKDF. The usage of such a function is often called password hashing to distinguish it from directly applying a hash over the password. Common implementations are PBKDF2, bcrypt and scrypt. The PBKDF uses password stretching to accomplish password strengthening. It adds at least two input variables besides the password: a salt and a work factor.



So to get back to your question:


don't use a normal hash for password hashing, use a password hash/PBKDF;
the more randomness in the password, the better - this usually means longer hashes not shorter ones;
the size of the password is not in any way limited by the (password) hash function.


A human will never - in real life scenarios - remember a password or care to type in a password that contains enough randomness to reach the security level provided by even the least of the hash functions (MD5).

In the end it doesn't really make sense to limit the size of passwords unless for backwards compatibility reasons. The minimum size should be controlled however, and as many possible additional measures should be taken to protect the password as passwords are inherently weak.