Where does an extra unit stop helping much?
The next unit of effort may contribute less than the previous one. Adding a second person to move chairs can help substantially, while adding a tenth person to a narrow storage room may add little. Diminishing returns concern the additional benefit of each extra input, with other conditions held fixed.
Go deeper
Examine the next contribution
A small room needs to be cleared. One person carries chairs slowly; a second person makes the work much faster. As more people enter, the doorway and walking space become crowded.
The additional output from each extra person can shrink because other resources remain fixed. This is the idea of diminishing marginal returns.
It does not mean total output immediately falls. Work can still increase, just by smaller amounts. If crowding becomes severe, output may eventually decline, but that is a further possibility rather than the definition.
The useful question is what the next person, hour or tool adds under current conditions. Expanding the doorway or changing the layout could alter the pattern by relaxing a different constraint.