How does the difficulty scale with more players?

Your observations for Multiplayer health scaling is only on Expert Mode.

• Only health scales, not damage.
• Only boss health scales. Common enemies have static health (but double compared to normal mode)
• It is per server, so anyone logged in to that server contributes to boss health scaling. This means having more players can potentially be detrimental if they are not actively contributing and carrying their weight towards boss damage.
• According to this thread. The health scales by 130 - 140% of the "one less player" health (ie. for three players it has ~135% the hp that it had for 2 players). If you're looking for specific numbers for a boss you intend to summon, this thread is an excellent place to look.
• It doesn't appear there is a limit to max health.

I'd like to add to the existing answer that there is in fact a limit to the max health which occurs at 1,498 players when the health is 1,000 times the original health.

This is illustrated on this webtool which shows the health for all the monsters scaling with a selected number of players.