The 16 block limit is a limitation of the new JSON templates that arrived with the OS 2.0 update. What would probably work better for you is to utilize a navigation menu with a linklist as you can have many more than 16 link items in that. I'm not sure how comfortable you are with using the code editor or what that section you reference does (as there's no visual in the provided screenshot) but assuming it is a way to list collections in an off-canvas or drop-down menu, using a navigation menu you should be able to get a similar result if not exactly the same.
With the linklists you can loop through the link items and pull in details associated with their object (if there is one) so if you wanted to list collections with their featured image you could easily do that, if you wanted to have a featured product be able to be added to cart or sent directly to checkout from the menu you could easily do that. The navigation menu functionality that Shopify provides is very powerful and useful in a variety of scenarios even if you are not using them for a traditional navigation menu.
Hope that helps!
- Rob Dukarski Helping to make commerce better for everyone!