Aaron Bertrand shows why you might not want to oversize VARCHAR columns by too much:
Now, whether you go by the old standard or the new one, you do have to support the possibility that someone will use all the characters allowed. Which means you have to use 254 or 320 characters. But what I’ve seen people do is not bother researching the standard at all, and just assume that they need to support 1,000 characters, 4,000 characters, or even beyond.
So let’s take a look at what happens when we have tables with an e-mail address column of varying size, but storing the exact same data:
This is a good argument against automatically using VARCHAR(8000) (much less MAX) when creating columns.