digitally native minds
First let us note that, in education theory, we are more concerned about transfer of knowledge rather than mere information. The digitally native students probably have no greater capacity than the previous generations when it comes to memorizing strings of digits or meaningless shapes. But they may have greater capacity of understanding.
Second let us note that any information transfer requires a medium of delivery and an efficient delivery requires compression/decompression tools. In machine-to-machine communications, these tools operate algorithmically. In a human-to-human verbal communication, the language itself is the compression tool. Of course, depending on the subject involved, language can be a very lossy transmission tool. For instance, it is particularly ill-suited to for transferring emotional states across. (Hence the reason why not all of us can become poets, and why a hug can mean a lot more than a thousand word.) In machine-to-machine communications, a bad choice of medium can cause a decrease in bandwidth or an increase in noise or information loss. In human-to-human communications, the choice is even more important, since the dynamics are infinitely more complex. (For instance, we are effected by things such as our mood, habits, previous memories etc.)
Cognitive limits of digitally native students are different because their minds employ different metaphors and are used to different mediums of delivery. Let me explain what I mean.
MEDIUMS
There is no fundamental litmus test for cognitive limits. The experiments are always defined by the experimental tools involved. The digitally native students find certain mediums more engaging than others and engagement definitely increases the learning capacity. If you test their cognitive limits with printed books, they will score less. If you test their cognitive limits with iPad, they will score more.
METAPHORS
Since we understand the world in terms of metaphors, the extent and character of our metaphors define how much we can understand. Scientists once thought that the mind operated like a steam engine, now they think it operates more like a computer. The metaphor they employ will change in the future as new technologies emerge and we become very acquainted with them (so that they can become units of our understanding.)
As our set of metaphors become more complex, our cognitive limits are enhanced. Think of this phenomenon as coding in a higher level language, or like zipping a large batch of files into a single small one. A single word "computer" has so much meaning embedded in it.
Digitally native students may be capable of employing metaphors with greater compression power than the previous generations. Think of Facebook or the extremely versatile game called Minecraft. These are powerful metaphors. The teachers should embrace them in their professions, rather than dismissing them as just another trending phenomena.
Do not forget that, during the black-and-white TV era, a lot of people thought they saw their dreams in black and white. Whether this was misreporting of otherwise colorful dreams is irrelevant... We shape technology and technology in turn shapes us.
As a side note, I do not find this depressing at all. On the contrary, it give me hope. The next generation with their different minds and metaphors may be able to tackle scientific problems that we could not.