Good question, because there were a lot of myths about this.
What I was primarily doing for BIONICLE was writing the comics and the books. Anything I did had to get approved by LEGO Company. I couldn't just do stuff without somebody looking it over first. I was never the "head" of the story team - the marketing lead always ran the story team. And most ideas that came out of those meetings were a combination of notions from multiple people. Because most of the rest of the team was in Billund, I was pretty much the only one in the US office who knew the story, so I would help out if someone here needed to know something.
The one major time I was able to influence something was at the very beginning, because the original notion was that all the Toa would essentially talk like Thor and be very godlike. And I suggested it should be more like the JLA or the FF, where everyone had distinct personalities and they didn't always get along. And I did win that one.
As far as limits go, well, the limits tended to be less connected to BIONICLE and more to LEGO guidelines in general. Things like level of violence depicted, language, stuff like that was all pretty strictly regulated. And, of course, there were long-term plot points I wasn't allowed to reveal ahead of time.