Do you have anonymous users enabled and in use?
The platform counts your admin account as 1, + all the other users that you have setup.
When using anonymous access the platform creates a temporary user, this does count as a named user. (In other words if you want an app that supports many anonymous users, you should get a concurrent user license)
If that isn't the case I would like in the database table system$user and see how many users are really in there. Maybe something went wrong with creating of users. You could always make an (after startup) microflow that removes all the system.User records except for the MxAdmin.
Anonymous users already disabled and deleted un-used demo user from front end and backend also but
as i deleted un-used demo user from system$user table except Mxadmin & run this on cloud server, still this is showing same error message (license issue)
and which 4 user we have created these are still showing after login by Admin user.
like:- firstname.lastname@example.org, email@example.com, firstname.lastname@example.org (for example renamed credentials here)