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So you only get +1 army cap at level 2,3 and 4 each. And one more at level 6.
However, you can later on buy infinite army cap increases for Dread. The price is always 1500 Dread, unlocked at Ruinationlvl 8.
And you easily get hundreds of dread per turn later on, just buy all the "dread per turn" upgrades for the armies you have. And put the building with %Dread from battles into every herdstone.
Basically the real limit are the unit- and hero cap upgrades, without those the armies aren't really worth buying the cap upgrade.