The log sequence number is a unique id assigned to all entries in the transaction log. The LSN gives an ordered list of changes to a database. E.G. 1st change to the DB gets LSN:1, the next change gets LSN:2 and so on. If you want to restore a database, the log file is re-played in the order of the LSNs, so changes always happen in the same order. Take a look [here] for a little more information on LSNs :
A backup is a transaction and will be identified in the Transaction Log. A full backup will include any in-flight transactions that complete before the backup finishes. The most up to date LSN is included in the header of the backup and in SQL Server so Transaction Log backups and Differential backups can read the Transaction Log and backup their relevant data. LSNs are not a backup-specific entity but are part of the transaction processes that SQL Server utilizes.