Water disappears when placed at height 256.

That's it. It doesn't allow you to place blocks at height 256 and directly can't be done. But when you try to place water, it places, dissapears and sends the message of "Height limit for building is 256 blocks" in chat. It doesn't get back in the bucket.

Steps to follow:
1: Build a column up to height 255.
2: Place a water bucket just above.
3: Result.