Removing a Member from a Capacity Plan
To remove a member or reinstate a team member, both your Admin Privileges and Project Role must be set to "Project Lead".
Teams Feature is ON
If a member is no longer working on a team, you can remove that member's row on the Capacity Planning page using the Remove action. Removing a member also removes any capacity attributed to that member in open sprints, but retains entered capacity for closed sprints. The row can always be recalled to view historical entries by selecting the Show All Contributing Members filter setting. If the member rejoins the team, you can add them back to the list.
Other things to consider: The members are not able to be removed from the team because they still have work assigned to them and that work may be in another project. You need to remove the work for these members (blank out the capacity values under the sprint columns) and then such members are removed automatically from Capacity Planning. You may have to re-open a sprint or two to get this accomplished. However, somewhere in the project tree, these members still have some work assigned.
You can also go to the member's details page by clicking Administration > Members > Members and see what backlog items they have assigned or any relationships they might still have as the work may exist in a different project.
Teams Feature is OFF
Capacity is specified per project, per member, per sprint. The member list on the Capacity Planning page shows all members assigned to the project plus anyone who has capacity assigned to them in the project, so there is no explicit Remove action at the member level. You can always remove capacity entries for any member going forward if they are no longer working on the project.