On what basis TO DO – WIP limit is fixed ?
There is no secret formula about how many items we can put in to-do and how many we can put in WIP limit.
We select items from backlog to to-do based on what we can finish within a shorter period of time. The backlog is a list of work which needs to be done. These are prioritized, so top things we really want to do and things which are at the bottom may not happen in reality.
Now based on the capacity available for a given short period, we select items in the to-do.
While deciding WIP, you need to understand how many people are there in the team and how many things do we want them to work at a time. We take appropriate judgment and limit may get wrong in the beginning. These may need adjustment based on learnings how the set limit is helping or nor helping.
That's why it is not needed to put too many efforts in setting the initial limits.