Your plan counts the products you have published, including published products you have switched off. Drafts are not counted, so you can add and save as many drafts as you like.
Open Products: the Published products card shows what you have published out of what your plan allows, such as 12 / 25, and how many more you can publish. The Drafts card says Not counted in your plan. Open Categories to see the separate category counter. On a plan with no limit, the card says Unlimited on your plan.
At the limit, a banner offers Upgrade Now. You can upgrade from there or from Subscription Plan in the side menu, or delete a published product you no longer need. You can keep editing your products, updating their stock and saving new drafts.