Google Apps, like many other SaaS-model services, introduces the concept of Licences. Rather than paying for an amount of users directly, you purchase licences. Each licence then permits you to create a user, to which a licence is allocated.
You cannot create more users if you do not have any licences to allocate to them. In this circumstance, you must first purchase more licences.
What is a User?
A user is defined as one personalized email address (firstname.lastname@example.org).
If you delete a user, the licence is then unallocated, and can then be used to create another new user account. Surplus licences, even if not used, remain on your account and continue to be billed.
If no licence is allocated, a users account will not function, and will not have access to any of the apps in the Google Apps suite, such as Mail, Drive, and so forth.