Think about the surface of the planet. All of the objects on just the surface of Earth. Now, imagine expanding out the surface like an inflating balloon into space.
The surface of your “balloon” is the amount of space you have to put things into orbit at a single altitude. Everything up there is actively tracked and the orbits are constant, so if you want to put something else up there you can just check if your orbit will intersect with something else’s.
Want some more room? Expand out the balloon a little bigger or smaller (changing altitude) and start putting stuff there, too.
There is a ton of room up there, much more than the surface of the planet, and we have a lot more than a few thousand objects on the surface.
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