This is an issue in Vancouver. One large house built to house an extended family of sometimes as many as 20 people.
Its a way of depriving city of property taxes, that would have otherwise have taxed multiple dwellings for the same amount of people. So the 2500 sqft limit is to collect more tax.
I live in vancouver and I don't have a problem with high occupancy houses that are actually utilized. It's the jerks in GRVD who have unoccupied mansions that have been blowing up housing costs that I have a real problem with. Vancouver has addressed that, but afaik Burnaby, tricities and north van haven't.
Its a way of depriving city of property taxes, that would have otherwise have taxed multiple dwellings for the same amount of people. So the 2500 sqft limit is to collect more tax.