Even though Swarm doesn't enforce a hard limit on the number of domains that you can create, having too many domains in a cluster can have the following downsides:
When using older versions of Swarm, before security.noauth became enabled by default in Swarm 9.0, the domains will be listed in the persistent settings stream. It's possible that a lot of domain creation/removal activity will cause some PSS churn, but if the list of domains is relatively stable, this is not a major problem.
Domains appear in the port 90 web console (when security.noauth is not enabled). Customers with > 100 domains should use the new Swarm UI.
Swarm will cache small streams when they are accessed frequently enough. They age out of the cache over time, when they're not being used. One of the concerns of having a lot of domains is losing locality of reference as, presumably, requests will naturally spread across those many domains.
Domains have 16 reps, so having too many domains can put some load on the Health Processor that needs to maintain those 16 reps, plus it can slow down replication via feeds.