The text isn't really about capacity limitations at all. (And yes, airlines can, and do, overbook flights but that's a different matter).

It's a revenue management/protection issue; no airline would ever want to offer every economy seat on a particular flight at the cheapest discount economy fare, and no airline would ever want to offer every business class seat on a particular flight at the cheapest discount business fare.

Instead, as cheaper fares are sold, those fare buckets get "closed off", and intending passengers have to pick from the remaining range of (higher) fares.