Session capacity is the maximum number of attendees a single session can hold, set by the room, the format or the platform.
The room has a fire-code limit. The format has a practical limit, because a workshop stops working above a certain size. A virtual session may have a platform limit. The lowest of the three is your real capacity, and it is not always the one printed on the floor plan.
Capping forces attendees to register in advance, which gives you a real number for room assignment. Not capping means you find out at the door. The cost of capping is the attendee turned away from a half-empty room because the people who registered did not turn up.
Session registration routinely overstates attendance by about a third. Teams that cap at exactly the room count end up with empty seats inside and a queue outside. Overbooking slightly, the way airlines do, feels uncomfortable and is usually correct.
Capacity is set per session, and admins and speakers can still enter a session that has reached its limit, so a full room never locks out the person presenting in it. See event agenda builder.