How it works is the county or muni specifies the number. This is similar to allocating land for single family or multi tenant. You can of course bypass this and rent rooms or have a group house, but renters may not have the same legal protections.

No-one wants to live like MacArthur Park area in LA, that has 4x the density of Manhattan, NY, where every apartment has a shadow family that is evicted every year or two.