When you ask what people you're not actually asking "what people?" You're asking how many people. One thing you'll notice with Japanese and kanji is that 何, when added to other things, often means "how many _____" rather than "what ____." Just something you have to know and experience a bit to catch on to, but you will, I believe in you.

This word uses the kun'yomi reading for 何 and the on'yomi reading for 人. If you know the readings of your kanji you'll know how to read this as well. Take note that 人 uses its にん reading here.