Without setting your Maximum Order Volume, competitors can easily spy on your sales velocity by adding 999 units to their cart. When they do this, Amazon will tell them how many units you have in stock. By watching this over time, they can tell how many units you have sold, and how often, you restock. Automated tools make this easy for sellers to do for all of their competitors, and for products they are considering selling.
Setting the Maximum Order Quantity to a reasonable number - More than the typical consumer buys, and fewer than you normally have in stock - will prevent others from being able to determine how many you have in stock, and thus spying on your sales volume.
You can control this setting inside your "Edit Listing" page inside Seller Central.
Even with "One Redemption Per Customer" checked inside the promotion settings, a buyer can add multiple of your product to their cart in a single transaction, and the promotion is applied to the entire quantity. For sellers who run steep discounts, competitors could use this to wipe out your inventory and then resell it themselves.
We recommend that any seller running a promotion more than about 20% off, set a reasonable Maximum Order Quantity to protect their inventory from being sold to a single buyer.
Although you can change this setting for most of your inventory through Seller Central, MAX makes it easy to change the Max Order Quantity for all of your products at once, instead of one-at-a-time through Seller Central. Since MAX uses the MWS API to send a Feed to Amazon, it also means that you can use it to change the setting, even when there is not an input box for it in the Seller Central interface.