No. You can certainly have a LUN much larger than the volume. Think of the LUN as the presentation to the outside work. How much space do you want the host to see. The volume then is how much space do you think the data is actually going to take. This way unused space in the LUN and duplicate and compressible data is not consuming space in the volume. You can of course change the volume size up or down on the fly without the host being aware.