What's the difference between JIRA Software server and JIRA Software datacenter?

Is it just the quantity of users that it could manage? Or there is something about functionality?

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Features/functionality-wise, they are identical. The difference is the ability to scale while maintaining performance through access to more resources. Plus, by deploying to a hosting service like AWS, you can offload much of the system administration required with Server. Data Center is also optimized for AWS deployment, offers SAML 2.0 support, and comes with Atlassian-supported disaster recovery — none of which is available with the Server version.

A minor point - there are a number of add-ons for Server that do not function properly on data-centre (mostly down to caching stuff).  If you're considering a more to DC, check your add-ons.

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I want to clarify this.  Does jira datacenter handle avatars the same as jira server?  I know when I installed jira datacenter, in the JIRA_Home/data folder, there was an attachments folder but no avatars folder.

Not quite.  Parts of the data directory have to be located on shared storage, so the file structure is a bit different, but that's the only significant difference.

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