Suppose I create a server of schools, will it be possible for schools to create different communities inside the discourse server. The school might have a profile picture, an about us, etc. Or this should be done using creating the schools as users?
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Welcome, @anonmyous-alien 
It depends on the goal you want to achieve and the purpose of your forum.
Is it for the schools’ owners? Teachers? Students?
What would the discussions be focused on?
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Actually I took the wrong analogy my apologies, a better one would be of NGO. So like each NGO shall have its own aim, purpose and funding that they received. And each NGO would be able to create multiple projects and events which they are organising
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I have one group that has different categories for schools and a theme component that changes the site logo depending on what group the user is in. It also changes the home page to the associated category using Custom Homepage.
Is there a reason that each NGO shouldn’t just have its own Discourse?
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Okay that would make sense, what about projects and events? So for managing projects and events would they create different categories?
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Events would just be a topic, I’d think. Unless it was some large event like a conference that needed a topic for every presentation or something?
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Yes events would be topics and each project would be a category right?
A category or a tag. 
If events are organized on your forum, you can also be interested in these official plugins:
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What if I want to upload photos and files in a particular project which should be visible as soon as I open the category, that is also possible right?
You can upload files of any type (you can choose which extensions are authorized) in a topic, and media embedding is supported for some internal or external content.
If you want to know better what Discourse is capable of, in addition to asking questions here, I suggest you experiment at https://try.discourse.org/ as a user, and/or start a free trial so you can see what the admin options look like.
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Okay thank you very much!!
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Just to add to what others have mentioned.
You can use groups for individual categories(Schools) I would use say a 2 group model as example.
ie
School A category
- Group A Members with request to join option this way a problem member can be booted from group if needed.
- Group A Staff. This group would be Category Moderators one or more would be owner of Group A members.
To arrange topics/projects you have a couple of options. Subcategories and Tags. You may want to create a Sub category only visible to group staff to have a direct place for staff discussions.
Category settings might include for main Category see everyone. create/reply Members & Staff group.
Add plugins as others have suggested and your maybe close to what your looking for.
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- I don’t think categories are a good choice for this, because they are relatively heavyweight. By definition, both projects and events are limited in time. A category is basically forever.
- Actually… although I love Discourse, it’s neither a project management tool nor an event planning one. It might not be the right software for what you envision.
But, uh, really — what are you wanting to do?
You can use multisite too, from the same Discourse base.
It’s not the default installation and could be a little tricky but works and it’s secure if you know what you do or hire someone who knows.