Sometimes you cannot change the 'Max participants' to a lower number even though there seems to be less participants on the activity at the time being. When you try to do it you get an error message about there being too many participants.

Example: There are 'Max participants = 5' on the activity and right now you only have 4 registered participants. Still you are not able to adjust to 'Max participants = 4.

This is because the max participants are calculated at any given time during the activity run time.
See below where you have 4 active registrations after 11/2 (Reg 13, 14, 15 and 16) but in the period 29/1-11/2 you have 5 participants (Reg 11, 12, 13, 14 and 15). Thus the 'Max participants' can never be set below 5.

Activity running 1/1 - 28/2
Reg 10: 1/1 - 28/1
Reg 11: 1/1 - 11/2
Reg 12: 1/1 - 11/2
Reg 13: 28/1 - 28/2
Reg 14: 28/1 - 28/2
Reg 15: 29/1 - 28/2
Reg 16: 11/2 - 28/2