When joplin cloud hits a storage limit, what does it do?

Attachment over 200 MB will simply be blocked, so it won't be possible to upload them. You'll get a message about it in the app, and you'd probably want to delete that attachment or somehow compress it.

The account essentially becomes read-only when you reach the storage limit - you can still delete notes or attachments to make room but you won't be able to upload more.