the numbers use to be the "class" designation while the letters spelled out the extras.
for example the 240D and the 300D are the same chassis both have Diesels but the 240 is not as fancy as the 300. same with the 280SE's and 300SE's of the 60's. the 300's had air suspension and more fancy things that I don't remember off the top of my head.
SL ment Sport Light (Sport Leicht in german)
E ment Fuel Injected (Einspritzung)
K ment Compressor (Kompressor)
T ment Wagon (Touring) or Turbo for some folks
L ment long (Lang)
not quite sure the extact term for the S but it was to designate fanciness
the list goes on, but if the engine was different then the std offering it was listed after the extras (the lettering)
thus the 300SEL 6.3 stood for a Fancy, Long 300 class with a 6.3 Fuel Injected Engine which deviated from the std offering.
The new way of doing things has every thing backwards, the letter is the class with the numbers saying what engine it has (and the extras). I personally liked the old way, but after awhile I'll admit it probably got way too complicated.