There always come many good and useful threads in the MSDN development forums. Here is a very good thread in which Carlos Figueira clearly illustrated what and how does the "MaxItemsInObjectGraph" setting does on the WCF DataContractSerializer.

#What is counted as an item in WCF ObjectGraph for DataContractSerializer?
http://social.msdn.microsoft.com/Forums/en-US/wcf/thread/12e09a40-df41-4bf7-8462-c40df68af3d5