The part of the code is the following :
  <xsl:variable name="ln_subframe" select="name(*)"/>
  <xsl:number level="any"
         count="*[*/caption and name(*)=$ln_subframe]"
         format="1 "/>


that's legal, but rather strange.

* selects all the children of the current node.
name() given a node set gives the name of the first node in the node
set in document order.

so ln_subframe is the name of the first child.

Then 

 level="any"
         count="*

selects all previous nodes in the document and  filters so you
count only those nodes that have a grandchild called caption,
and a first child which has the same name as the first child
of the current node (but this need not be the parent of the caption
element) 

David

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