What does putting more ram into a server do?

So far my understanding is the more ram you have on a server the more people at one time can access it? Is that it or am I far off? 

Thats not really a question that can just be answerred yes or no. More ram sure do help (well it uses more power so doesn't help your power bill) - so it can be used by programs or disk cache. What matters is how much ram each person is using, or how much on-disk data is being used - caching in ram sure helps. And how much CPU each one using - you may hit 100% cpu use well before anything else.

Ok so servers are very similar to how gaming computers work. Like if you upgrade the CPU the frame rate will only go up as much as the GPU will let It (bottle necking). So upgrading the ram will only do so much for the server well as much as the other components allow it?