I would say this refers to every ticket having been sold for an event that requires a ticket to attend. So, for example, consider a rock band that is booked to play a venue that can hold 2000 people. If the venue sells 2000 tickets then that event is sold out.

"Sold - out" means that an event has sold all of its tickets, so the event was completely full. For example, If you went to a concert and you could no longer buy tickets because all the tickets were purchased, you could say this was a "sold-out concert".

See a collection of real examples here (they only include examples that happen to have been translated into (or from) French): https://www.linguee.fr/anglais-francais/traduction/sold-out+crowd.html

The phrase is really used: «"Juniors Wailing" performed live in front of a sold out crowd at Wembley by the original Frantic Four, reunited on stage for the first time in 32 years», as description of a video posted by "OfficialStatusQuo". I was surprised, too, and wondered if it was a mistake, that's why I searched the phrase on the Net and found this forum. Although the term "sold out" properly applies to the event, in "sold-out crowd" it applies in fact to the attendants to the event. This kind of shift is called a "metonymy" - as a rhetorical figure or as an instance of language change.