It's only bad because sometimes the program cannot handle this and freezes. So I hate this message. Sometimes, game freezes immediately after unit limit has been reached for the first time, sometimes - only after many such messages, and sometimes it works ok as long as you want, it seems. Even worse when the game freezes when AI civ reaches its unit limit and you cannot do anything about it.
Fortification of the second and third unit in your cities when no enemy units are around can help, as they will be "archived" (from unit list to city special data field), but even when you look into city screen of this city, they would be unpacked back, possibly with exact same message and possibly with freezing the game, so this is so-so solution.