As has been explained in earlier topics, you will never actually see that many players at once.
It is split into several groups of 32v32, but their objectives are linked, that is, its 128 v 128 with the armies split into 4, with one part fighting over one thing or another against a part of the enemy army.
So 256 is total bullstuff. However it's a good marketing move because most people won't check too far into it and take it at face value.