The limit is $400. Then, if you have a credit card on your account, they will charge the card and your balance due will be zero again. If you don't have a credit card on your account, then you must keep your balance due under $400. You can do this by either putting cash or traveller's checks on your account before hand (so you'll have a positive balance), or by paying periodically throughout the cruise.
We were on the 12-8 Magic and I just went to Guets Services every day or so and got a printout of our charges and paid them down to an appropriate level using cash. This also allowed me to keep an eye on our spending, which saves that sticker shock amny people have at the end of the cruise. Then, on the last night, we switched over to a credit card for express checkout. This just means that any last-minute charges were charged to my credit card so I wouldn't have to visit Guest Services on disembarkation morning, when the lines can get very long.
Hope this helps.