There is no limit in local files. But if you want to download using your nice Premium stuff to Offline playlist, you have 3,333 track limit for that Offline use need. You still can stream as much as you want when you go Online. :)
Local tracks are not included to this limit. Only limit might be amount of size in your phone. Maybe your memory card is too little to handle all your local tracks, but this is not problem actually when you can stream many tracks from Spotify servers -> less need for transfer mp3 files.
Currently there is no option for Local files in Android, however you can get those just by making playlist using Desktop app from local files (you may need to update it if you add some songs later) and then make it available offline. Then, over wifi, Spotify magically sync local tracks to your lovely phone and you can listen those tracks then from playlist. You can name it for example "Local files". If there is no Wifi, just use USB cable for transfering.
A slight slip up there. Local files can't be transferred to the mobile app over USB cable. Just make sure that your computer and mobile are sharing the same wi-fi network (best with computer not connected by cable). Then run Spotify on both. Any tracks in playlists made available offline on your mobile should sync over wi-fi.