/data modify thinks NBT is too large, but /data merge doesn't

The bug

In some cases, a /data modify command will fail with the new "Resulting NBT too large" error, but an equivalent /data merge command will succeed.

Unfortunately, as of yet I'm not able to work out the exact conditions for the discrepancy, but we do have a repro world!

How to reproduce

1. Download and open the attached world
2. Run

/data merge storage pandamium:temp {test:2}
/data modify storage pandamium:temp test set value 3

Expected result
Both commands should succeed

Actual result
The second command fails with a "Resulting NBT too large" error