Hi,
if you have a SAN, a LUN is a piece of your SAN, some vendors call it virtual disc. Let's say you have a 10TB RAID 6 Array in your SAN. You can split that into 2TB blocks in your SAN-management and you get 5 LUNs.
What you see as datastore in your vSphere client is a VMFS formatted partition that lies on your local disc or your SAN LUN.
You can create multiple datastores on a single LUN ( like normal partitioning ) and you can also connect multiple LUNs to create a single large datastore.
besides the LUN limit, vSphere 5.1 has also the 256 VMFS volumes per host limit, so yes, 256 datastores is the limit at the moment.
Regards