Depth limited search calls its recursive partner RECURSIVE-DLS to search the search tree using a depth limit.

RECURSIVE-DLS implements the TREE-SEARCH algorithm using depth first search with a depth limit.  You can see the effect of the depth limit in the else if statement, the 4th line in the RECURSIVE-DLS method() .  Here, if the depth limit is reached, a flag cutoff is returned to the caller (either DEPTH-LIMITED-SEARCH or RECURSIVE-DLS).  In the latter case, RECURSIVE-DLS backtracks and has to try another successor if possible.  In the former (when cutoff is returned to the calling function DEPTH-LIMIT-SEARCH, the search tree (to depth limit) has been entirely explored and exhausted for goal states.

The depth limit limit is propagated in each recursive call and does not change (is invariant).  The Depth[node] call in line 4 retrieves the node’s depth and checks it with the limit.