This is the fundamental cap of parallel client connections your apache should handle at once.
With prefork, only one request can be handled per process. Therefore the whole apache can process at most $MaxClients requests in the time it takes to handle a single request. Of course, this ideal maximum can only be reached if the application needs less than 1/$MaxClients resources per request.
If, for example, the application takes a second of cpu-time to answer a single request, setting MaxClients to four will limit your throughput to four requests per second: Each request uses up an apache connection and apache will only handle four at a time. But if the server has only two CPUs, not even this can be reached, because every wall-clock second only has two cpu seconds, but the requests would need four cpu seconds.
This tells apache how many idle processes should hang around. The bigger this number the more burst load apache can swallow before needing to spawn extra processes, which is expensive and thus slows down the current request.
Having too many unused apache processes hanging around just wastes memory, thus apache uses the MaxSpareServers number to limit the amount of spare processes it is holding in reserve for bursts of requests.
This limits the number of requests a single process will handle throughout its lifetime. If you are very concerned about stability, you should put an actual limit here to continually recycle the apache processes to prevent resource leaks from affecting the system.
This is just the amount of processes apache starts by default. Set this to the usual amount of running apache processes to reduce warm-up time of your system. Even if you ignore this setting, apache will use the Min-/MaxSpareServers values to spawn new processes as required.
See also the documentation for apache's multi-processing modules.