Here is my post from there for ease of reading

.
TLG
Here is the way I interpret it:
There is essentially two seperate issues here:
Magic
God like abilities
Magic is the ability to access the magical energies of a certain place. This usually refers to the prime material plane, but the source goes through ALL planes. Mystra controls the weave on Toril, but she is known as many other names as well. Basically, there are infinate "Mystra's" throughout the multiverse, each controlling magic in their own way (such as the three moon gods in Dragonlance. They are simply a split up "version" of Mystra). On Toril, the "entity" if you will that controls magic is known as Mystra and has a distinct personality on that plane. She controls magic there, which includes deities who access the magic in that plane.
Godlike abilites are granted to the gods on their own plane. they come from their very nature of being gods. They also have access to the weave, which they use to provide magic to their followers by way of divine spells. This access is what Mystra can cut off, because she actually IS the magic that is being provided. Kind of like your wife cutting you off when she has a headache. However you can still take care of whatever "needs" you have yourself

(a crude and strange example I know

)
The godlike abilites that a god has on his own plane, would be unaffected by Mystra. So in hell, Asmodeas would still have access to his abilities. Also, I would say that while a god or goddess of magic could probably cut off access to magic in hell, it would take a significant amount of energy to do so, and the devils would still maintain their basic powers.
Now on to Karsus' use of his Avatar spell. Limits have been placed upon the ability to draw certain power levels of magic from the weave in each of the prime material planes (which is controlled by the god or goddess of magic there). These prevent events of this magnitude from happening. I would also say that similar limits exist in the other planes, probably imposed by the AO's of the universe. There is no direct rules for this, but I would assume that if a human wizard can learn to become lvl 20 in less than say, 200 years (with longevity and such), a devil with a million years would be able to become much more powerful. However, we dont see lvl 99000000 devil wizards do we? There must be some kind of limitating factor that is imposed, even though it is not stated anywhere. In my game, Asmodeous would not be capable of castings spells of that magnitude because of divine restrictions (ie AO or multiple god restrictions from long ago). However, one of the neat things about humans and other mundane races is they where given free will, and are "born" without restrictions, thus sometimes they can circumvent the normal limitations.