If it was capping overall power it would make sense, but the way it's implemented the primary function seems to be to punish anybody who didn't specialize hard enough, early enough. You could easily crank Strength up to level 60+ and obliterate everything with one kick, but Charm, Mind, and Energy can easily get stuck at level 1 forever because your strength and stamina pushed you into the level cap before you had the option to really train them. And a lot of titles/accessories/edicts that are supposed to improve those hard-to-raise stats never get used at all, because by the time you manage to get them you've stopped earning experience entirely.
It's not punishing you for not specializing, the game is literally designed and balanced in such a way that you can clear encounters using any stat distribution, there's even an NPC that tells you to not worry about it because it really doesn't matter in the end.
Maybe this will change once the lower floors open up, or maybe the exp gain rates for different stats will get rebalanced, but as things stand the level cap mostly means that if you play through the game blind, you lock yourself out of the options you actually want and in order to do anything other than a pure slugger build you need to plan out every move you make before you start playing.
Masochists have stats that improve their effectiveness but those stats don't matter in the end because you'll win regardless of what your distribution is, and Sadists can still resort to sex acts to win in the same way.
As soon as Karryn, no matter what distribution you have, is engaged in a sex act with enemies, regardless of who initiated it, what position it is, or how many enemies are involved, you've beaten the involved enemies and the stats only serve to make beating them faster.
The only time stats become relevant is when you're trying to win against overcapped enemies using combat specifically instead of sex, and that's pretty much limited to just the Guards (and you control their level progression), if the enemy is at or below your cap you should be able to win through combat or sex just fine unless you don't understand the mechanics and/or what your skills do.
Higher stat levels shouldn't be impossible to achieve with dedicated effort, but they should cost enough that you won't rise past some reasonable point unless you try.
That's literally how it works right now.
You have to make an effort to outright ignore other skill types to cause Karryn's stats to develop in an uneven manner.
If you have a lot of Strength and everything else is lower, that wasn't the game being poorly balanced with stat increases that was you spamming Blunt skills and neglecting Slash and Pierce attacks, on top of neglecting or outright ignoring Willpower, Energy, and Sexual skills.
Literally every single interaction in a fight gives exp for a stat, including enemy actions.
The dev made it so you
can specialize in stats and even added titles for doing so, including titles that outright permanently unlock certain edicts for you, but the game is absolutely able to be played through without doing it and you're actually expected not to specialize because it makes parts of the game harder rather than easier.
But including a whole complex advancement system, and then making it impossible to advance for the majority of the play time? Just seems like bad form in an otherwise well designed game.
They don't make it impossible to advance for the majority of play time since you don't spend much, if any time at level cap the first time you clear a floor, that means when there's a full game to play you'll constantly be leveling up during the main story.