Fusion reactions are reactions in which atoms of lighter elements combine to form atoms of heavier elements. Energy is released when these reactions take place because the mass of the particles formed is less than the mass of the particles that the reactions start with. The decrease in mass is equivalent to the energy released by Einstein's mass-energy formula E = m*c^2, where E is energy released, m is the mass and c is the velocity of light.
The difference in the mass of a nucleus from the total mass of the individual particles that form the nucleus is known as the nuclear binding energy. The nuclear binding energy per nucleon is seen to increase as we move from hydrogen towards heavier elements. The value reaches a maximum with iron.
As the combination of particles to form atoms of elements heavier than iron does not result in a net release of energy, fusion reactions stop with iron. Formation of heavier atoms would require energy to supplied instead of a release of energy. This is referred to as the "iron limit."
In nuclear fusion, two atoms are brought together with the intent of "fusing" the atoms into a single, larger atom. An atom can only have the number of protons, neutrons, and electrons of its atomic weight, so if two differing atoms fuse and there is extra mass, it is released in the form of energy or heat.
The iron limit refers to the maximum weight of a fusing atom before the process becomes fission rather than fusion. In fission, the two atoms fusing together require an external supply of energy, and without it, the reaction will not continue by itself. In stars, for example, all fusion is limited to elements below the atomic weight of iron, which allows the fusion process to continue by itself; once iron starts to enter the fusion process, energy is lost and the process starts to break down, the heavier elements becoming inert and non-reactive. Isotope Iron-56 is the upper limit of weight that will provide an energetic release without needing an external energy source.
Simply put, the iron limit is the upper limit of atomic weight allowed before the fusion process becomes fission, which cannot be continued without an external source of energy.