The reason seems a little contradictory.
Softpedia points to a Nvidia Developer Zone forum post revealing that the company has removed a specific Linux feature as of the v310 drivers due to the Windows platform. A BaseMosaic user on Ubuntu 12.04 noticed a change in the number of displays that can be used simultaneously after upgrading from the v295 drivers to v310.
According to the post, the Ubuntu user connected three displays using BaseMosaic, backed by Nvidia's v310 drivers and two GeForce GTX 560 Ti cards in SLI. But after configuring the xorg.conf file and adding the supposedly supported fourth display, only three monitors would light up.
"Then I tried installing the v325 drivers after uninstalling all the Ubuntu Nvidia packages," the post reads. "This only worked for 2 monitors, because I couldn't get BaseMosaic working anymore, even not from the Nvidia GUI after enabling advanced options. After a little bit of research I found that v310 only supports up to 3 monitors in BaseMosaic, the same is valid for v325."
Yet in v295, the Ubuntu user was able to get four monitors up and running. So why was BaseMosaic altered to support only three monitors instead? Nvidia explains. "For feature parity between Windows and Linux we set BaseMosaic to 3 screens," said "Sandpit" of Nvidia's Linux team.
What's interesting here is that Nvidia's proprietary Windows driver has features not found in the Linux drivers, but the company will remove specific Linux-only features for "parity." The comment indicates that the three-screen limit has nothing to do with a degradation of quality when using four screens, but a possible Microsoft request/demand.
Nvidia's driver documentation states that BaseMosaic can be used to extend a single X screen transparently across all of the available display outputs on each GPU.
"This is like SLI Mosaic mode except that it does not require a video bridge connected to the graphics cards," the notes read. "Due to this Base Mosaic does not guarantee there will be no tearing between the display boundaries. Base Mosaic is supported on all the configurations supported by SLI Mosaic Mode. It is also supported on Quadro FX 380, Quadro FX 580 and all G80 or higher non-mobile NVS cards."
It will be interesting to see if Nvidia returns four-monitor support back to its Linux drivers, given that the reason for removing the feature seems a little contradictory.