To see how to configure the Openfire’s memory take a look at the “Custom Parameters” section of the Openfire Installation Guide. And to get an idea of the number of users you can support on your machine take a look at the Openfire Requirements document.
Advanced users may wish to pass in parameters to the Java virtual machine (VM) to customize the runtime environment of Openfire. You can do this by creating vmoptions files in the bin/ directory of your Openfire installation. For the Windows service, you’d create a new text file called openfire-service.vmoptions. Each parameter to the VM should be on a new line of the file. For example, to set the minimum heap size to 512 MB and max VM heap size to 1024 MB, you’d use:
-Xms512m
-Xmx1024m
To create parameters for the normal launcher, create a file called openfired.vmoptions (since the openfire.exe launcher invokes the openfired.exe executable to actually start the server).