In atomically thin semiconductors based on transition metal dichalcogenides, photoexcitation can be used to generate high densities of electron-hole pairs. Due to optical nonlinearities, which originate from Pauli blocking and many-body effects of the excited carriers, the generated carrier density will deviate from a linear increase in pump fluence. In this paper, we use a theoretical approach that combines results from ab-initio electronic-state calculations with a many-body treatment of optical excitation to describe nonlinear absorption properties and the resulting excited carrier dynamics. We determine the validity range of a linear approximation for the excited carrier density vs. pump power and identify the role and magnitude of optical nonlinearities at elevated excitation carrier densities for MoS2, MoSe2, WS2, and WSe2 considering various excitation conditions. We find that for above-band-gap photoexcitation, the use of a linear absorption coefficient of the unexcited system can strongly underestimate the achievable carrier density for a wide range of pump fluences due to many-body renormalizations of the two-particle density-of-states.