... arrays expand as needed. ... the size of your array will expand to 346 x 65536 ...

That's a bit misleading. It implies the allocation of space for a | an orthogonal multi-dimensional array of 346 * 65,536 == 22,675,456 elements. Because Perl multi-dimensional arrays are "ragged", each array "dimension" (update: maybe "vector" would be a better term here) is only allocated the space it actually needs. I count the array specified in the OPed code like this:

• @array array of 346 elements, mostly undefined;
• $array[0] reference to an empty array;
• $array[1] undefined, doesn't exist as an array;
• $array[2] reference to an array of 65536 elements, only two of which are defined;
• array elements  @array[3 .. 344] are undefined;
• $array[345] reference to an array of 11 elements, only one of which is defined.

By my count, I get a total of 346 + 65,536 + 11 == 65,893 elements, almost all of which are undefined; the array, as it stands, is very sparse.

Update: Please see Manipulating Arrays of Arrays in Perl (perllol) and Perl Data Structures Cookbook (perldsc).