You have to be a confluence administrator to be able to add people to the system by going to the user management page like you said. After that then you can add people to spaces by going to the permissions page in the space admin section of the space. The people menu is just to view all the users of the instance. You can then select people and view their profiles form there but thats about it.
The real answer: Use the gear menu in the upper right to go to User Management.
I have no idea what the People menu is for...
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You need to have Space Administrator permissions to add people, or some form of proprietary User management tool that manages the process fro you
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