It's also possible to configure how long the last item can remain in someone's cart until it becomes available again if a purchase is not made:

This means that if the last item is added to the cart, and the person decides not to purchase, then after the designated time (three hours in the above example) the item becomes available again for purchase.

The number of items left in stock is shown in the product admin section - each product will have a number after it like this:

PC Keyboard (6)

The number will decrease with each sale. It is necessary to "turn on" the stock management in your Main Admin page to use this feature.

From Version 4.4.0 you can use stock management on product options as well as on the overall product. On the products admin page if you are using stock management you should see a drop down menu Which allows you to choose between "In Stock" that will set the stock level for the overall product and "By Options" which will set stock levels by the stock of the product options.
An important thing to note is that if you share an option between 2 products the options stock is shared between 2 products. This could be useful if you have say only 20 disk drives, each of which could go in one of 5 different models of PC. However, if this is not what you intend then on the product options admin page we have also provided a "Clone" button to quickly create a copy of one product option. Using the Option Working Name you will also be able to distinguish these internally.

IMPORTANT NOTE
If you find that orders are remaining out of stock after the time stipulated in the main admin settings then go to the admin orders page and do a "power search" for unauthorized and cancelled orders and delete all of them. Then hit the "purge deleted" button and that will free up the stock again.