Mobs can be tagged by five people and looted. As well as those five people, everyone in their parties gets to loot as well. Assuming another player doesn't get a tag in, two teams of 4 guarantee that all 8 characters can loot every mob tagged by both teams. 8 is also the max number of WoW licenses you can have on a single bnet account, meaning all 8 toons can share in account-wide things like mounts, pets, and tmog.

I run 8 toons, and the main reason that I made the jump from 5 to 8 was for more chances at rare loot, like mounts. There are pros and cons to running 8.