After seeing some successful competitions on other platforms, SyX thought that it is a good idea to start a ROM game development competiton. The reason for the 16k limit is to open the compo for more participants, because small games are more probable to get finished than big games. Another reason for the ROM game competition is, that we have a lot of ROM boards around these days (e.g. the Megaflash or the Symbiface II) and we are also able to produce new cartridges for the Amstrad Plus since the ACID chip was reverse engineered, but we are missing more ROM games. You can read more about the competition (e.g. the rules, the prizes, some example code, etc.) in the CPC Wiki forums.
So if you have a great idea for a game, it is a good time to start working on it now .