Of course data can be buffered and grow if the client is too slow to read the server's writes [1].
But what is the default buffer size? I assume it's whatever is configured in /proc/sys/net/ipv4/tcp_rmem and tcp_wmem (assuming Linux)...
I'm trying to do some basic capacity planning. If I have a VPS with 512 MB RAM, and I assume the OS et al will use ~ 100MB, my app has ~ 400MB for whatever it wants to do. If each connected client (regular old TCP/IP socket) requires say 8KB (4KB read, 4KB write) by default, I have capacity for 400MB / 8KB = ~ 50000 clients.
[1] http://nodejs.org/docs/v0.4.7/api/all.html#socket.bufferSize