Input voltage limits of AD8495 (thermocouple amplifier) vs supply voltage
No you're not correctly understanding this. The Vs-1.6V is an operational specification, so the part will not necessarily function if the input is closer to Vs than 1.6V (at 25 degrees C only, so you will want to leave more margin). This is the common mode range of the amplifier. 

Damage may occur if you exceed the absolute maximum ratings, which appear- max and min look to be reversed- to be quite generous, so you won't be anywhere near them- a good thing for abs max ratings: 



In general, it's not a bad idea to have some series resistance on inputs if your circuit can handle it. Even a few K can help. 

Also see this section of the datasheet: