@Abhay Chandramouli Thanks for sharing the requested information, Capacity represents the overall health of the APIM instances driven by the following system-wide performance metrics
CPU
Memory
Request queue length
I see for the given time period the total number of incoming requests was high as shown below,
increasing the number of requests for an APIM instance can result in increasing the capacity for the APIM instance.
The APIM Proxy is not the only component that contributes towards the capacity of the service. In addition to the Proxy component, the APIM instances have other components running alongside like Management API, Developer Portal, Analytics, Logging, anti-virus etc. Even in cases, where there are no incoming proxy requests at all, the service will still show a certain capacity being utilized by the components described above. You should be concerned if the capacity is effecting the performance of the APIM service, if there is latency in processing the requests etc. If the service is performing as desired then you should not worry much about some capacity being utilized.
do let me know incase of further queries, I would be happy to assist you.