I think that the altitude limitation for the DA 42 is associated with the diesel engine restart ability. We flew a Avgas powered DA 42 to 19,500 during hot fuel testing - no problem.
I've had a normally aspirated, carburetted C 185 to 20,800 feet during mogas testing. I got it through 21,000, but it would not stay up there. At that altitude, full power was 12" MP, and I was flying at 72 MPH, with the stall horn screaming. The mogas worked fine though!
For pressurized aircraft, the 25,000 limitation may be associated with the passenger oxygen system flow requirements, which change at 25,000 feet. I can tell you that with the thinner air there, hand flying can be more difficult. I hand flew the Piper Cheyenne up there a few time, and it was no fun whatever!