Memory for string returned from C++ DLL

[Harmyder]

How memory gets allocated for a variable that is passed into the DLL? How much data DLL can write into such a variable?

function STRING SetupDll_Do(szValue)
  STRING ret;
begin
  UseDLL(PATH_SETUPDLL); 
  setup.Do(szValue, ret);
  UnUseDLL(PATH_SETUPDLL); 
  return ret;
end;