Not sure if this is zsh, iterm2 or the interaction between them. Trying to change the number of recallable lines in the terminal - not the command history, the output history.>
It's not a shell problem, it's about your terminal emulator.
You have to find the option in the configuration / options / tools / whatever, for the number of lines to remember.
Apparently you know your terminal emulator is iterm2.
Looking for iterm2 on the google will lead you to the official website, then go to 'Documentation', Ctrl+F 'number' and find
Scrollback lines
The number of lines of scrollback buffer to keep above the visible part of the screen.