People assume that just because Twilight is an Alicorn and her special talent is magic itself, that automatically she is the most powerful being.
What people don't realize is that Twilight has to have limits in some retrospect. Twilight is not invincible from what I can tell in the show/ comic, and while she has potential to be the most powerful, she isn't there yet, or can't achieve it yet. While we can't tell Twilight's limits based on the show, we can base them on theories on how magic works in other media.
I consider the work of MLP in a fantasy setting, with dragons, hydras, etc. There are modern elements, but it seems like a modern fantasy setting to me. So I will assume that it is.
In any given fantasy magical system, a person must have limits to his/ her magical abilities, or the story has no conflict: the magic can overwhelm the other side if there is no limit. For this reason I believe that Twilight has limits, but what kind?
A common theory (rule/idea) is that a person can only cast so many spells, use an ability so many times in a day, or use a measured amount of magic. This is the most common use in role-playing games, where the rules rigorously define them. Similarly, in Robert Jordan's The Wheel of Time series, the One Power is limitless but each individual user can only channel a limited amount of it at any one time.
Anyways what's this have to do with MLP, well a lot. Remember in the Crystal Empire episodes (episodes that are still being argued of they where good or not). Anyways the Crystal Empire is being protected by a shield cast by princess Cadence, however we are told that she has been doing this for a while and is exhausted. Eventually it tires her out and she faints. Clearly a sign of a limitation as she couldn't use the same spell forever, however this theory on "mana" doesn't mention fatigue. In fact the theory of "mana" mentioned that the user can only use so much magic in one day, yet its stated that Cadence has been using this spell for days repeatedly. So what's the deal? Is there no answer?
Well yes there is
Another theory of magic is that energy is taken from the spell-caster to power the spell itself, such as in Christopher Paolini's Inheritance Cycle. Depending on how strong or advanced the spell is compared to the caster, the spell can cause weakness, fainting, or even death.
This describes what Cadence was going through. While Cadence was getting weaker, the shield stayed relatively the same, not changing in strength (otherwise Sombra would have broken through). She used herself as an energy source that was running out and this caused her to collapse in fatigue. So we know that beings like Cadence (or lower) have limits, but what about Celestia and Luna?
Well first off, you have to consider what Celestia and Luna are. Some consider them as deities and thus they should have limitless power right?
WRONG!!
Remember in Canterlot wedding where Celestia got her flank handed to her by Crysalis. She may have lost because of Shining Armors love that fueled Cryslais, but it also may have been Celestia's fault. If the character is a deity or similar, limits may be entirely self-imposed, like Simkin from the Darksword series. Celestia could potentially have given herself limits and is why she isn't as much of a god as we thought her to be. This is all theory and I'm not here for Celestia or Luna, I'll get to them another day (so I won't describe why they have limits based on this theory). I'm here for Twilight.
Where does that leave is with her? She isn't a deity, but she is on a higher level then Cadence, so what's the deal. Does she have limits or not? Some argue that she has potentially limitless magic that is sealed inside her. So what gives? Is there no solution?
Well....Yes there is
An alternative form of magical limitation provides theoretically unlimited power, but restricts what a user can do to what that user is capable of imagining, comprehending and understanding. In this scenario, magical ability may often be increased through scientific study of the world in order to better understand its working, something observed in The Belgariad by David Eddings.
If we are to assume that Twilight has limitless power, then why couldn't she use spells she currently uses earlier on? Twilight had to learn her spells and later comprehended the magic of friendship that would help her grow. Similarly Starswirl the Bearded is what some would say the Twilight of his time. He made an impact yet never became an Alicorn because he did not understand friendship. He did not understand something, and as a result was limited.
So here we are on my Final Thoughts:
Twilight is a powerful being, but we have to realize that she has limits. She may have potential hidden magic, but that still shows limits as she can't achieve it yet.
3 possibilities are presented to us
1) Twilight's limits are self-imposed. I had an discussion with someone else and the idea was presented that Twilight may have made mental blocks or someone made mental blocks to prevent another surge of power (see the "Cutie Mark Chronicles" episode) from happening. This was probably done to keep others safe (strange theory, but possible).
2) She is limited to how much magic she herself is able to produce before she collapses (how much is that is anyone's guess).
3) A more likely idea is that Twilight may have limitless power, but is limited to what she knows and understands. She can grow stronger after her knowledge increases or her understanding how things works grows.
And isn't this what the show is about. Twilight Sparkle, a young mare who was limited by herself, discovers the magic of friendship and grows as a result of her experiences. Slowly shaping her way to the princess she is today.