If your event has a maximum number of participants, you can enter this quantity here. The system will then automatically stop taking registrations once the event is sold out.
You may also manually set your event to be “Sold Out” if required.

Registrations is the quantity of payments that occur.
Participants is the quantity of people registered.

eg. If 2 people register in the 1 registration then there is 1 registration and 2 participants.
eg. A team registration with 3 people in the team is 1 registration and 3 participants.

So in most cases you'll use the participant quantity to set the sell out limit.

Please Note - do not tick the sold out tick box when setting up this option. It will be ticked automatically by the system when the event sells out.