(NOTE: This only applies if using the Streaming Server. It does NOT apply to Progressive Streaming) This is the number of connections to the streaming server at the EXACT SAME moment. It only "counts" the number of people streaming a video, so someone browsing your site and NOT playing a movie would NOT count towards a sim connection. In general, a Flash Streaming Server host will offer several options depending on the licensing of the streaming server.
Typical limits are from 50 "sim connects" up to 2500 sim connects, this higher option is usually retained for dedicated servers.
If the number of sim connects reaches the limits, then the person trying to connect must wait for a connection to "open" – similar to how a phone switchboard would work, 50 lines in, if all occupied, then must redial to find an open line. If your application only contains data (e.g., video streaming) you will almost certainly reach the peak bandwidth per second limit before you reach the number of simultaneous connections (users) limit .
Look for the number of "sim connects" in your hosting plan when using FLV Hosting Streaming