We actually hit about 14,000 at peak.
It depends what you mean by "serve". That could mean a head participant (i.e. a user who is signing state snapshots as a part of consensus). That could also mean users signing transactions within the head. Those two numbers don't have to be the same. For example, we had 1 participant signing state snapshots, but we had "users" signing transactions for most games (player, AI, server).
I don't know of any hard limits on the number of participants. Of course, consensus would slow down with more participants, due to network latency. There are also resource limits (a node may require more memory that it's provided) but nothing defined in the protocol afaik.