So we all know what Items are, right? They are things and stuff!
Items
Items come in various types, and these types often have sub-types. None of that is too important, so we will just get to the explainations.

Here's an example of an item inside it's Item Info UI. Version 0.6.2
Consumable

Typically, this type of item stacks so when viewing it in your inventory, you'll be able to move them around in bulk as well as buy or sell in multiple quantities.
Material

A sub-section of materials will be for items that are meant to be sold, basically currency in the form of an item aka TRASH. It's always fun to sell your trash to a vendor and make out like a bandit, right?
Equipment

Now if you haven't gotten to the Equipment System yet, the basic idea is that each unit can equip up to five items. There is a Main Hand slot, and Off Hand slot, 2 x Armor Slots, and an Accessory slot.
Weapons/Shields
The MH and OH slots will be where your weapons and/or shields get equipped. Want to use a 2 Handed weapon? That'll take up both slots. Want to use a 1 Handed weapon and a Shield? MH/OH! Want to say "to hell with the Shield" and equip two 1 Handed weapons? Well why not? Well for one reason, if your unit isn't trained for it, it'll most likely be more of a hindrance, but who cares, go for it!
Armor (Head, Body, Arm, Leg)
The two (2) armor slots are up to you and can include one (1) of each type of Armor. Basically you can't wear two helmets. But a hat and gloves? That's fine.
Accessories
Lastly, the accessory slot will take one (1) accessory. As of this writing, the Accessory System is one of the last Item Systems that remain to be completed, they will basically be special equipment that has rare or unique qualities to enhance your units. It could be a ring that allows you to walk on water, I mean those are pretty common. Maybe an amulet that heals you every turn? I'll make sure there's something for everyone!
Special
The last and most mysterious of item types. Really it's just where everything that doesn't fit in the above categories go. This will most likely be limited to Key Items, things you need for the story and wouldn't want to sell (don't worry, you won't be able to).
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Inventory UI showing various Armor. Version 0.6.2
So that's basically it, there are hundreds of unique items that span the various categories and range from super common to super unique! Items are stored in your inventory which can be browsed from the World Map or Unit Management screens. As for limits on holding items, I don't really have one. Maybe for consumables, the limit will be 99? That seems like a good number.