Unclear The actual limits, and whether these new errors can appear on your screen, are not settled.
MCP servers are outside tools you connect to Claude Code. When one of them reports an error, Claude Code removes the server's own settings (its URL, arguments, headers and environment values) from the error text before showing it. Part of that work is undoing layers of encoding so hidden copies of those values are found too.
That step now has a cap on how many layers it undoes and on how long the text may get. Past those limits it stops with one of these errors instead of quietly using its last attempt:
MCP error text or config too long or too deeply encodedMCP error text too long once decoded
It also now reads URLs in a way that no longer hides URL errors.
It is meant to stop secrets in an MCP server's settings from slipping through an error message by being encoded several times over.
The actual limits, and whether these new errors can appear on your screen, are not settled.