A wireless network is only a single, shared medium with a limited total bandwidth. The more clients compete for bandwidth the smaller each slice gets.
Additionally, the simple presence of clients consumes bandwidth = air time. It's not much per client but it sums up.
Also, more clients also mean more potential senders, so that collisions become more likely. They're generally tried to be avoided but that can't be accomplished 100%. Each collision means wasted bandwidth for the partial transmission, the jam time (so that everybody hears the collision) and the random retransmission pause (to avoid the next collision).
Finally, spreading a number of wireless nodes over a larger area makes the _hidden station_ problem more apparent where a potential sender can't hear that another sender is already transmitting, making a collision hard to avoid.