You can add, modify and deactivate user accounts and groups under Administration > Users and groups. In the user account list, you can see active and inactive users, user types, and the number of licenses used and still available.
One user can belong to several groups at once. For example, groups like Leadership and Accounting/Finance. Every user is assigned a permission set, which affects how much and what they can see and do on your site. Read more about permission sets.
User groups are used in all views. Assigning your team members into groups helps you to select a certain group of people faster when for example adding them to a calendar event.
Users are divided as active and inactive. When a user account is marked as inactive, a license is released and available for another user.
An account cannot be deleted since that would break the relations within the site. You can mark a user account inactive and that user will not be able to log in anymore.
All of the projects and tasks that were related to that user can be assigned to another active user or marked as unassigned. For that, filter out those projects and tasks in the relevant list views.
In order to increase the number of licenses, please use the site management: Settings > Administration > Plan, add-ons and billing. There you can also change your site plan and get add-ons for your site.