Question about sentence in application note: "incremented modulo-256". Request explanation and clarification
It just means that the number is incremented. But when it reaches the value 255 the next value will be 0. 

Thus the sequence will be:
0, 1, 2, 3, .... 250, 251, 252, 253, 254, 255, 0, 1, 2, ...

You will get this behavior if you use an uint8_t ( #include &lt;stdint.h&gt;) and increment it:

#include &lt;stdint.h&gt;

uint8_t sequence_number=0;
...
   sequence_number++;