Scalability in terms of software engineering is a characteristic of an application. It is a descriptive metric that is used to convey the measurement/ability of an application to handle/process a growing amount of either users or transactions.
In order to effectively use and measure the scalability of a system, you must first define the criteria and elements that are being described.
Scalability in terms of users, transactions, throughput, hardware resources are all different.
Scalability is closely related to system performance and capacity. These are architectural terms. There are two ways to scale a system, vertically and horizontally. Vertical scaling means adding resources to a single computer (node), i.e. memory, CPU chips.
Horizontal scaling means adding more nodes (computers) to an application. If you added ten computers to house a pool of relational database management systems for an e-commerce application, this would be an example of horizontal scaling.