A velocity limit prevents a repricing system from making too many price changes too quickly. This protects against race-to-the-bottom spirals when multiple sellers are all using automated repricing systems that react to each other in real time.
Velocity limits can be configured in two dimensions: change frequency (e.g. no more than 3 price changes per hour per SKU) and change magnitude (e.g. no single change may exceed 5% of the current price).