Well, it works that way on the Nester emulator too, so yes, that's probably a hardware limitation. I don't quite understand the finer points of old 8-bit programming and palette swapping, but I do know that various NES games from that era had some amusing screen-edge glitches in them that a player could sometimes exploit to his advantage.
For instance, Ninja Gaiden had what I called the "Incredible Disappearing Enemy" trick by which, if you carefully scrolled the screen forward while an enemy on a platform near the edge was stepping backwards, you could sometimes watch the enemy vanish off the platform altogether. (This was especially handy on Level 6, where there wasn't much of anywhere for you to stand otherwise.) At the same time, one of the more frustrating effects of this same glitch had to do with enemies rapidly re-spawning every time you destroyed them, especially the bird that consumed three (!) of your hit points every time it struck you.
Incidentally, yes, the edges of the screen would often be invisible to someone playing the game on the original console hooked up to an old Fullscreen CRT TV. When playing a DVD on one of those old televisions, I noticed that although the movie had black bars on its left and right due to being made with a European ratio (5:3) instead of an American one (4:3 or 16:9), these were cut off on the TV itself. Apparently, those old TVs shave anywhere from about 20-60 pixels off every edge. That's why the old game consoles could get away with so many of these shenanigans.