ulimit vs file-max

Could someone explain limit on open files in linux? The problem is that one of my applications if reporting "Too many open files". I have ulimit -n 1024 but cat /proc/sys/fs/file-max 6578523 and cat /proc/sys/fs/file-nr 1536 So I already have 1536 > 1024. What is ulimit -n then? This is very confusing.