人が多ければ - If there are many people
多いほど - to the extent that there are many people
楽しくなる。- will become more fun.
ば can be seen as a conditional which says "if and only if." So -- If (and only if) there are many people (to extent that there are many) it will be fun. The construction is providing a hypothetical, providing an outcome and showing correlation.
日本語の会話を練習すればするほどペラペラになるよ。If and only if you practice Japanese conversation, to the extent you do it, you will become fluent.
人が多いほど楽しい - It will be as much fun as there are people (?). Quasi-particle ほど is providing a limit/upper boundary. As the amount of people increases, so does the fun.