I followed along through the script:
> m=20000
...
> test1() { ...
Eventually I got to this line:
> set -- $(seq $m)
At that line I see that bash must allocate enough memory to hold all
of the numbers from 1 through 20000 in memory all at one time. That
is very inefficient. That is at least 100K of memory.
$ seq 20000 | wc -c
108894
Of course I assume this is only a proxy simpler reproducer for the
actual problem program but just the same it is almost always possible
to refactor a program into a different algorithm that avoids the need
to enumerate so many arguments in memory. I suggest refactoring the
program to avoid the need for this memory stress.
Bob