I have a remote machine with two zfs datasets mounted under the /home directory. When I log into the remote machine via SSH, I can mv files between datasets no problem. When I have the remote /home directory mounted to my local machine with SSHFS, I can cp files between datasets, but attempting to mv files results in "operation not permitted". I can also mv files to other filesystems between either dataset. And I can mv files from either remote dataset to local datasets. Is there a limitation on why I can't mv files between remote datasets directly over SSHFS? Both remote datasets reside in the same pool.

mv works here.

You're probably tripping over ownerships somewhere. If you don't see it, perform the intermediary step of moving the file to your own local directory, and then into the second filesystem.