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You can still type a novel... it you look in the corner of the messaging screen you will see a 1/1 or 1/2 etc. Thats the number of 160 character-limited messages you have created. When you are done with your "novel", it will send it but the person will simple recieve 1 or 2 or 3 text messages containing the full message.
As it has been mentioned you have your messages stiched together using a non-standard sms service but the end result is still the same. I sometimes pump out small books worth of text and everyone within my circle still receives them fine.
Of course you can email too and that is basically un-restricted but then not everyone receives email on their phone. But many of my friends have PPC's and so we just email large text, attachements, etc...
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