There's nothing in that repo that says, but at a guess: old machines often had non-uniform ways to access memory, so it may have been to test that the compiler would still work if the binary grew over some threshold.
Even today's machines often have a limit as to the offset that can be included in an instruction, so a compiler will have to use different machine instructions if a branch or load/store needs a larger offset. That would be another thing that this function might be useful to test. Actually that seems more likely.
It might be instructive to compare the binary size of this function to the offset length allowed in various PDP-11 machine instructions
Yes it seems like this is something to do with hardware testing. Maybe memory or registers or something that needed just X bytes etc for overflows or something. It’s really random and the only person who would know it is the one who wrote it :)