I got a message saying I was carrying 520 items, exceeding the 500 item limit, and to get rid of some. I wasn't aware there was a limit, but I figured I'd get rid of some stuff I don't use much. I guess I can do without 5 stacks of stone salves.

I gave away some stuff, dumped some more stuff, maybe 20 items total. But when I switched servers, I was down to 462 items.

How exactly are items calculated? Even if it was by 1 "block" = 1 "item", I didn't get rid of 60 blocks worth of stuff. Anyone know anything about this?

Nah, 1 item = 1 item. Stacks count as 1 item. Its not really a limit its more a warning because lots of items bloat your character filesize.

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Fear is not evil… It tells you what your weakness is. And once you know your weakness, you can become stronger as well as kinder. - Gildarts Clive, Fairy Tail, Hiro Mashima.