There is a difference between theoretical and actual performance.
Theoretically, the wireless hardware inside the iPhone may be able to do more than 5 connections at once, but Apple and the carriers have limited it to 5 for power and data usage reasons. It's highly likely that having more than 5 connected devices would overwhelm your phone's battery, Wi-Fi radio, and cellular radio.
Think about something like the CPU inside your phone: it can technically run at 1GHz or higher, but if iOS ran the CPU at full tilt all the time, your phone would get really hot and the battery would die really quickly. Instead, iOS makes sure to only run the CPU at full tilt when you're doing something intensive (like photo editing or playing a game), and brings it back to low speed when you stop running the game (or the phone gets too hot).
As for carrier control, the iPhone (and cellular iPad) can download carrier profiles over-the-air and tell your phone how to connect to the cellular network and what restrictions exist (such as whether tethering is allowed or not).