Capacity is essentially throughput when observed through the lens of the effective number of user devices. WiFi devices use frequency based channels as explained above. Radio waves from different devices can cause interference, inducing errors and reduced throughput. The following discussion on modulation explains the why and how.
Besides the channel bandwidth (amount of frequency space to modulate) the method of modulation governs practical throughput. Modulation is the technique used to encode a binary stream into a radio wave. All radio frequency transmissions are a sine wave. The wave starts at 0 reaches a positive peak, descends through 0 to a negative peak and returns to 0. It does this at the rate of frequency, 2.4 or 5.8 billions of times per second in the case of current Wi-Fi. Modulation techniques form the wave and allow measurement at multiple points. Each point defines a bit (0 or 1) or, as a full wave, be taken as a whole to define a symbol.
The usable number of points is in a binary geometric progression: 2,4,8,...256... dependent on the clarity of the received signal. Advanced WiFi techniques allow the use of up to 256 bits per wave; however, usable throughput (error corrected) is dependent on the signal. Advanced techniques use multiple antennas (MIMO) to obtain the optimum corrected signal stream.
The IEEE identifies the maximums in its 802.11 Wi-Fi specification. The frequency bands used are 2.4 & 5.8Ghz. The different modulation schemes are designated by letters:
802.11b - 11 Mbs, 802.11g - 54 Mbs, 802.11n - 600 Mbs
802.11a - 54 Mbs, 802.11ac - 6,922 Mbs
These Wi-Fi schemes use channels assigned to devices. Interference can occur, limiting throughput when many signals are in close proximity. In 2019, the IEEE adopted a new modulation standard 802.11ax which is essentially the LTE broadband scheme used for cellular data. This new standard is labeled as WiFi 6 and will be initially employed in the newly opened public (ISM) frequencies in the 1-6GHz bands.
This modulation technique does not assign particular channels to devices for transmissions from the base station. It uses a block of frequencies within a band in 1-100MHz increments. The incoming bitstream is converted to a time-domain spread (FFT), then transmitted over a single wave period across the majority of the block as symbols on individual frequency carriers. Because the modulation is limited only by the size of the block rather than a conventional channel bandwidth, an immense amount of data may be transmitted, almost 10Gbs with the ax standard.
However, uplink is limited to channelized speeds as the scheme uses shared channel modulation (FDMA). This is not a significant issue as the downlink speed is the critical metric for user devices.
Expect to see conventional WiFi (802.11a,b,g,n,ac) replaced in the future with ax type modulation. Standards have evolved over time for LTE, 4G going to 5G, with 8G in the works.