There is obviously a limit on those graphs were things start clipping. What sets that limit? Is it the dynamic range of the CD, or the original recording gear?

The limits on the graph (+1/-1) are the limits of the CD, but it's the fault of the mastering process, not the CD which has plenty of range to spare. The clipping could be in the recording; however, modern professional pop recordings won't have that problem (well, unless they do it on purpose for a "lo-fi" sound).