Edit 17 July: This was actually a false positive bug report, the message we print when truncating startup logs in the database, "Startup logs exceeded the max size of 1MB!" made it seem like the script failed, when it fact it continued running and logs continued to be written to the coder-startup-scripts.log file in the workspace, which is the intended behavior.
I think we should clarify the language of the warning to make it clear the startup script has not failed.

A template that generates startup logs in excess of 1MB can cause builds to fail even though nothing fatal occurs during the provisioning of the workspace.

Provisioning should still complete but we should emit some message when we hit 1MB that no more logs will be emitted. We should consider making the limit configurable as well.