I can see we can create applications and add tenants to them, which can't be edited/changed later. Is it possible to Add multiple tenants to one application? And maybe change the tenant later.
Nope, applications are contained within tenants. Here's a blog post talking about multi tenant in FusionAuth.
Also, on the documentation, it can be seen that in order to support multi-tenant or offer services to more than one client.
In this scenario, it is suggested to maintain separate Users, Applications, and Groups for each of your clients.
Yes, you can think of a tenant as an entirely separate installation of FusionAuth. So you'd have to create users, applications and groups for each tenant. Another way of structuring this would be to have an application for each client. Which you choose depends on how much separation you need.
what is the purpose of multiple application and multiple tenants?
The main purpose of using tenants in the higher level of separation. If you want each client to have their own FusionAuth theme, API keys, and a separate user space, then you want multi tenant. If you don't care about the themes, tenant scoped API keys, or that someone with the same email address wil have the same password for the application of client A and client B (because both use the same FusionAuth and live in the same tenant, the user will have the same password for each application), then separate FusionAuth applications in the same tenant will work.