It's certainly part of it, you can do a lot more with fewer characters in Japanese.
For example it's kind of ridiculous how limited every input still is in western localizations of Animal Crossing. Even worse, it's not only for nicknames, but you're supposed to fit stuff like greetings and expressions in a dozen characters too.
It's bad enough in English, but absurd in languages that have generally longer words like French. You can tell even the localization team struggled to make those intelligible.
They're more often limited to 16 characters than any other number so I assume it has something to do with how they are storing it in memory because it's a multiple of 4.
Probably the same reason for only 10 characters, too, but it's not as obvious.
I doubt there's any technical reason for it, especially given that you can change your username at any time and other online services allow for longer usernames. I guess Nintendo just think that 10 characters is a reasonable cap for usernames.