From Windows Developer network:

“In the Windows API (with some exceptions discussed in the following paragraphs), the maximum length for a path is MAX_PATH, which is defined as 260 characters. A local path is structured in the following order: drive letter, colon, backslash, name components separated by backslashes, and a terminating null character. For example, the maximum path on drive D is "D:\some 256-character path string<NUL>" where "<NUL>" represents the invisible terminating null character for the current system codepage. (The characters < > are used here for visual clarity and cannot be part of a valid path string.)

The Windows API has many functions that also have Unicode versions to permit an extended-length path for a maximum total path length of 32,767 characters. This type of path is composed of components separated by backslashes, each up to the value returned in the lpMaximumComponentLength parameter of the GetVolumeInformation function (this value is commonly 255 characters). To specify an extended-length path, use the "\\?\" prefix. For example, "\\?\D:\very long path".”

Even if the underlying APIs may have support for really long paths, the problem occurs due to user interface tools like Windows Explorer, Cmd prompt and PowerShell which don't support Unicode variants of the Windows APIs. The result is then path names up to 256 chars. As of version 1.7, Cygwin uses unicode Windows APIs, you can use tools like bash shell or nano editor for management of files/paths with long names.

Log example for cwRsync transfer with long path names:

...
2014/03/25 22:08:42 >f+++++++++ backup/0123456789012345678901234567890123456789012345678901234567890123456789012345678901234567890123456789
/0123456789012345678901234567890123456789012345678901234567890123456789012345678901234567890123456789
/0123456789012345678901234567890123456789012345678901234567890123456789012345678901234567890123456789
/0123456789012345678901234567890123456789012345678901234567890123456789012345678901234567890123456789/testfile
...