Great to see everyone jumping in to help here!
It looks like there is some old documentation around. As @ggalmazor has described, it should not be necessary to modify XML for this feature to work.
I have updated the documentation on increasing the Aggregate database field length with the current recommended approach.
The XLSForm should look like:
| type | name | label | bind::odk:length |
|---|---|---|---|
| select_multiple opt_abc | multi | Select multi | 500 |
| geoshape | shape | Select an area | 1000 |