No. It’s an operating system / file system limitation. Not a computer resources limitation. It’s not the limitation of any app.
You are linking to people’s profiles. If you need to mention someone put an @ before their name. But you do not have to tag/mention people for no reason, or to solicit people’s help. If they are following this thread, they will get a notification of replies. Just reply. People who are interested in replying will reply.
But you said “many hundreds” of folders deep. With all due respect, I don’t sense any “usual use” here. Plus you are not hitting the limits of Obsidian. This is the limit of your file system.
I have no idea exactly what you’re trying to do, but it sounds beyond the scope of what Obsidian is designed for. Even the game “20 Questions” would sort of imply that anything at all can fit within a taxonomy hierarchy of roughly 20 levels deep. 
Yes. Refactor your structure completely. Or code whatever thing you are doing in some database format that is designed for this level of depth. Or research alternative file systems.
You can likely find a way to block internet access. But as for eliminating any potential risk? The short answer is no. The longer answer is a nuanced no.