Talking in terms of sets, I would take the above to mean $S \in V$. But my course's notes says
Let $S$ be a subset of a vector space $V$, the span of $S$, denoted $Span(S)$ is the smallest subspace of $V$ that contains $S$.
Which confuses me, because $V$ contains vectors, whereas $S$ is a set, not a vector, so by my definition, $V$ cannot contains $S$.
So by "$V$ contains $S$" I assume it means $S \subseteq V$, right? Is this considered correct also?
Yes. Unfortunately, "$x$ contains $y$" is ambiguous: it can mean either $y\in x$ or $y\subseteq x$. Some authors make this distinction between "contains" and "includes": a set contains its elements and includes its subsets. Unfortunately, some authors do just the opposite; e.g., quoting from p. 33 of C. St. J. A. Nash-Williams, On well-quasi-ordering transfinite sequences, Proc. Camb. Phil. Soc. 61 (1965), 33–37: