That's simultaneous connections to any particular machine. It is not a limit of peer to peer in general.
The thing that tends to drag down a p2p network is network browsing and the master browser election behavior and name resolution. In a peer to peer network, no particular computer is specifically assigned the master browser responsibility. All the systems go through an election process to decide which should be responsible for maintaining the browse list - the list of computers connected to the network that you see in 'network neighborhood. In general, the highest level operating system tries to be the master browser, but when they are all the same OS, there's no preference given. It usually ends up being controlled by whichever system has been connected to the network (or actually on) the longest. If that one gets disconnected from the network (or turned off), the election process starts again with all the remaining systems.
Adding a samba server (or a Windows Server) to large peer to peer network makes huge improvements because it can manually be set to take on the master browser responsibilities, even if it serves no other role.
