Everything can be done solo, it just takes a lot longer to progress due to the logistical limitations of being entirely alone.
More people means you can transport more carts or boats of materials at once, not to mention more spare inventory space of course. It also streamlines portal management because you don't have to set up both sides of a portal link by yourself.

Enemies get 40% more health and 4% more damage per additional player nearby but again I would reckon solo still has it the toughest in combat. They use their stamina to do all of the baiting/blocking/attacking alone with nobody else to capitalise on those massive stagger bonuses. Fortunately most enemies are pretty crap at chasing you through a procedurally generated world and the couple that aren't happen to be pretty light in the HP department compared to other enemies of their respective biome.