When RIP router sends update to routers, why it is limited to use only
512 bytes of UDP data. Why not more than that, even when it has a 1500 byte MTU. How is the maximum of 512 bytes determined?
You can find this on Page 19 of RFC 1058: RIP, the maximum UDP payload of a RIP update is 512 bytes:
The maximum datagram size is 512 octets. This includes only the portions of the datagram described above. It does not count the IP or UDP headers. The commands that involve network information allow information to be split across several datagrams. No special provisions are needed for continuations, since correct results will occur if the datagrams are processed individually.