What did I do wrong?

You need to keep looping the script so that it updates the amount of players that are in the game.

local message = --Save this variable for later.

while wait() do
    if game.Workspace:FindFirstChild("Message") == nil then --If the message is not in Workspace, create it.
        message = Instance.new("Message", game.Workspace)
    end
    if game.Players.NumPlayers <= 1 then
        game.Workspace.Message.Text = "This game needs atleast 2 players to start!"
        game.Workspace.Mainscript.Disabled = true
        repeat wait() until game.Players.NumPlayers >= 2 --Wait until there are 2 or more players in game.
    else
        game.Workspace.Message.Text = "Game starting!"
        wait(5)
        game.Workspace.Message.Text = ""
        wait(1)
        game.Worksapce.Mainscript.Disabled = false
        repeat wait() until game.Worksapce.Mainscript.Disabled == true --Waits until the game is over. (Assuming the game ends when the Mainscript is disabled.)
    end
end

function game()
--do stuff
game()
end
game()