Sugar dissolves in the solution and forms glucose which is the substrate and direct source of food for the yeast in the fermentation process,the amount of sugar affects fermentation in two ways:
Excess sugar can cause yeast fatality and is unhealthy for yeast growth,extreme sugar concentration can affect alcohol production as over concentration in solution may cease alcohol formation.
Insufficient sugar causes low glucose concentration which in turn lowers alcohol production.It is desired in laboratory experiments,however for industral scale production,low sugar means less product and thus high but reasonable amout of sugar is desired.