256 is the number or different values that can be stored in a single byte. (8 bits of information.) The highest number of values before an overflow in a single byte is generally thought to be 255, as 0 is used.
500 is probably an error code, like a 404 error code. Notchs website script for handling the server list probably wasn't designed for such a high number of servers, indeed. on wikipedia it saysthat a 500 error is a genaric server error, when no other error code fits.
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