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The purpose of creating a LUN, or logical unit number, is to carve out a portion of the SCSI target (a disk system, for instance) in order to allocate a certain amount of storage to the host. Each logical unit is given a specific number (logical unit number or LUN) to identify it to the host. In SCSI terminology, the SCSI target is identified by a bus/target/LUN convention. This goes back to the days of parallel SCSI (actually still the majority of shipments in the market) where there was a SCSI bus and several disk drives were hanging off of it. Sometimes there were several busses available to the host. So a bus/target/LUN triad identified the bus, the specific disk drive on that bus (target) and a LUN on that target disk. Fibre Channel and iSCSI have retained a variation of this terminology, i.e. LUNs are still used. Therefore, I will stay with the standard SCSI terminology to explain the concept.
In more complex storage systems, for example a RAID system, either modular or monolithic, there can be many RAID controllers and hundreds of disk drives. In these environments, a LUN can be made up of several drives (for example, a RAID-5 set created with 6 disk drives) but the concept remains the same. LUNs are a way to identify a specific type and amount of storage to the host. A large monolithic storage system, such as a DMX system from EMC, could have hundreds of LUNs defined by the storage administrator and allocated to the hosts. A lot of a storage administrator's time is spent in allocating, reallocating, expanding and adding to LUNs.
It is unrealistic to imagine a single LUN scenario in today's enterprise environment. The only example I can think of, in which a single LUN would be adequate is perhaps a very specific, dedicated storage system that caters to a single application. Even then more than one LUN is often needed.
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