The VDP area for the Sprite Attributes Table is 0x0300 to 0x037f. That is 128 bytes, which is 4 bytes per sprite. Each sprite entry in this table has the sprite's X/Y position, color, index to the character graphic to use, etc.
TI Extended Basic uses VDP 0x0370 to 0x03F0 for XB system use. That overlaps and cuts off the last 16 bytes of the Sprite Attribute Table, thus reducing by 4 the number of sprites that can be used.
Memory is so scarce on the TI that for a higher-level interpreter like BASIC to function, it has to sacrifice some hardware memory areas (like part of the sprite table) for use by the interpreter itself. This was certainly not done to cripple the hardware or similar. When you have a program running inside a program on such limited piece of hardware, that inner program of course cannot make full use of all aspects of the system as the outer program cannot use zero resources.
Also, fun fact, it is theoretically possible to use 3 (actually 4 I believe) sprites with regular TI BASIC, as there are three sprites worth of the Sprite Attribute Table unused, but you have to have the ability to POKE to that memory address, which BASIC did not allow. The sprites also would not be able to move via hardware, as that requires the sprites to be defined starting at 0x0300, but that is not the unused area of the VDP in regular BASIC.
This page shows the memory mappings of TI BASIC, EXTENDED BASIC, and general assembler (IE actual hardware).