What is a LUN?
Basically a piece of disk storage (like a logigal hard disk)
Instead of explaining that, I'd rather like you to read http://en.wikipedia.org/wiki/Logical_Unit_Number
What is a VMFS datastore?
VMFS is the name of VMware's filesystem on which the virtual machines are stored.
A LUN or disk/partition formatted with VMFS is called a datastore.
It's like NTFS for Windows, HPFS for OS/2 or EXT for Linux, ...
André