From the manual.

d7: File Number Sequence
When a picture is taken, the camera names the file by adding one to the last file number used. This option controls whether file numbering continues from the last number used when a new folder is created, the memory card is formatted, or a new memory card is inserted in the camera.

On
When a new folder is created, the memory card formatted, or a new memory card inserted in the camera, file numbering continues from the last number used or from the largest file number in the current folder, whichever is higher. If a photograph is taken when the current folder contains a photograph numbered 9999, a new folder will be created automatically and file numbering will begin again from 0001.
Off
File numbering is reset to 0001 when a new folder is created, the memory card is formatted, or a new memory card is inserted in the camera. Note that a new folder is created automatically if a picture is taken when the current folder contains 5000 pictures.
Reset
As for On, except that the next picture taken is assigned a file number by adding one to the largest file number in the current folder. If the folder is empty, file numbering is reset to 0001.

File Number Sequence

If the current folder is numbered 999 and contains either 5000 pictures or a photograph numbered 9999, the shutter-release button will be disabled and no further pictures can be taken (in addition, movie recording may be disabled if the camera calculates that the number of files needed to record a movie of the maximum length would result in the folder containing over 5000 files or a file with a number over 9999). Choose Reset for Custom Setting d7 (File number sequence) and then either format the current memory card or insert a new memory card.

--Bob