First of all, Apple not limiting the CPU or the GPU power usage per se, they are limiting the total power consumption — and they choose components that fit within that figure. Historically, this limit for the 15" model was set to around 80W+. The most likely reason for this limit is as others said — portability and power consumption. Another factor is the supplied power — Apple likes to keep their chargers compact and their batteries charged up fast. So they must have decided that this limit represents a sweet spot for their designs.
Generally, they do not limit the CPU. They let the CPU run as fast as it can but they do limit the maximal temperature the CPU can reach (which is the maximal safe operating temperature — 100C). This is incidentally the reason why you see the 100C pop up when people doing stress benchmarks — its simply how the laptop is designed to operate. Finally, the GPUs they choose historically have a TDP of 50W — why that, I have no idea, I suppose that this is also a number that Apple deems "fast enough" without breaking the thermal constraints of the chassis.
I don't understand why they don't do something like Razer and put in a 100w GPU with 2-3x the speed. I'm sure the battery would be terrible on that GPU, but isn't that why they have automatic graphics switching?
Because it's not that simple. More powerful GPU is also physically bigger, and you need to get the space somewhere. Also, you need to cool that thing somehow. Razer compromises by cutting down the battery size as well as having underside-directed exhaust vents (basically big fans are just over the heatsinks and they blow the air out from the underside of the laptop). In contrast, Apple needs more space for the battery and they do not use bottom-directed exhaust vents, since they hamper usability in cramped spaces (MBP exhausts blow the air behind the laptop instead).
Am I missing something here?
It's all about design tradeoffs. You want a silent cooling system, big thermals, powerful hardware and large battery? Then you laptop is going to be a brick. You want it portable? Then you have to give up some of the above. You want the battery life to be good? Then you don't just need a big battery, but also fine-fined power system and very efficient GPU switching (this is also why Apple uses a hardware GPU switching solution rather than a software-based solution like in gaming laptops) — which is more costly.
Apple's market proposition is still rather unique. They offer a laptop that (almost) matches the multimedia performance of premium multimedia laptops, the CPU performance and connectivity of a workstation class machine, while retaining the mobility of an ultrabook. The MBP game is flexibility. It doesn't really excel in any given category, but it's a very good compromise.
