What is the meaning of [The more the merrier]

The more people who are present, the better an occasion or situation (especially a party) will be.

The proverbial saying ‘the more the merrier’ is first found in John Heywood’s 1546 glossary A dialogue conteinyng the nomber in effect of all the prouerbes in the englishe tongue:

Haue among you blynde harpers (sayd I.)
The mo the merier.

Heywood was well known at the Tudor court and was a relative of Sir Thomas More, with whom he performed plays. It doesn’t seem likely from the context that Heywood was making a punning reference to More, but his text in Proverbs is frequently obscure so it is possible.