From WoWWiki

These have been put on to most Area of Effect spells as of patch 2.2.

Contents 1 Mechanics 1.1 Example 1.2 Spells 1.2.1 Blizzard 1.3 References

Mechanics

Each rank of each spell has a damage cap. Once this cap will be reached the spell does less damage to compensate so that it will not exceed its cap. The caps are not affected by gear or talents. So if you have good gear, you will reach the cap on (many) fewer mobs.

Apparently if mobs resist, the other mobs get more damage for that tick up to the cap. Also, crits seem to be able to exceed the cap for the mobs which are critted. (or maybe there is a crit cap also which just hasn't been reached)

Example

Let's make a fictional AoE spell with a stated damage of 200 and an (unstated) cap of 2000.

• 1 mob = 200
• 2 mobs = 400
• 10 mobs = 2000
• 11 mobs = 2000
  • 181.8 each.

Now add +1000 damage gear at 40% effect to damage (+400).

• 1 mob = 600
• 2 mobs = 1200
• 3 mobs = 1800
• 4 mobs = 2000
  • 500 each.
• 11 mobs = 2000
  • 181.8 each just like before

Spells

There is a nice list of empirical testing done on a forum post which I will try to find again. ^[1]

Blizzard

Blizzard: Rank 6 (1272 Frost Damage over 8 seconds) and 363 Bonus Spell Damage:

1-11 mobs, 236-237 damage per damage tick

12 mobs, 231-232 damage per damage tick

References