If a pedigree pup is put on the limited register, they can still breed and have puppies but those litters cannot be registered on the pedigree registry.
I would think the reason the pup with the broken tail was put on the limited register was because the breeder only wanted her offspring to have puppies if the dames were performing well in the ring. If a breeder can show each generation produced champion after champion, her status and value of the pups increases. That pup would not obtain such a high title so she did not want it to have pups that would "dilute" her lines achievments.
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