Mutual relative localization and identification is an important feature for the stabilization and navigation of multi-Unmanned Aerial Vehicle (UAV) systems. Camera-based communications technology, also referred to as Optical Camera Communications (OCC) in the literature, is a novel approach that could bring a valuable solution to such a complex task. In such system, the UAVs are equipped with LEDs that act as beacons and with cameras allowing them to locate the LEDs of other UAVs. Specific blinking sequences are assigned to the LEDs of each of the UAVs in order to uniquely identify them. This camera-based relative localization and identification system is immune to Radio Frequency (RF) electromagnetic interference and operates in Global Navigation satellite (GNSS) denied environments. In addition, since many UAVs are already equipped with cameras, the implementation of this system is inexpensive. In this article, we study in detail the capacity of this system and its limitations. Furthermore, we show how to construct blinking sequences for UAV LEDs in order to improve system performance. Finally, experimental results are presented to corroborate the analytical derivations.