Understanding of .NET internal StringBuilderCache class configuration

It is a per-thread cache so a low number is expected. Best to use the Reference Source for questions like this, you'll see the comments as well, which looks like (edited to fit):

    // The value 360 was chosen in discussion with performance experts as a 
    // compromise between using as litle memory (per thread) as possible and 
    // still covering a large part of short-lived StringBuilder creations on 
    // the startup path of VS designers.
    private const int MAX_BUILDER_SIZE = 360;

"VS designers" is a wee bit puzzling. Well, not really, surely this work was done to optimize Visual Studio. Neelie Kroes would have a field day and the EU would have another billion dollars if she would find out :)

Most strings built are probably small, so using a relatively small buffer size will cover most of the operations while not using up too much memory. Consider that there is a thread pool with possibly many threads being created. If every one of them would take up to 2kB for a cached buffer, it would add up to some amount of memory.