Embassy level 1 - You can join an alliance.

Embassy level 3 – You can found an alliance and it can have total of 9 players

Embassy level 4-20 – with each level, 3 more people can join the alliance. Therefore at level 20 embassy, the alliance can hold the maximum of 60 players.

Demolishing an embassy does not cause existing members of alliance to be kicked out, but to invite more players (or players to replace kicked players) the embassy must be upgraded to the level required by the player amount.