“At Character Limit” ! If you see this message, you have reached the maximum number of characters that can live in your village. The Smurfs and the roaming critters (i.e. the snail and the caterpillar) count as characters, the stationary Smurfs and the stationary animals (for example the butterflies) do not count for the character limit.
The creators of the game have stated that increasing the character limit is, at the moment, not an option due to the limited memory resources the mobile devices, especially the older iPhones and iPods, offer. They are, however, thinking of a way to make it possible to remove roaming critters so that new Smurfs can be added. There has not been given any timeframe for that, so it is not expected in the next couple of updates and might take a while until that will be possible.