Yes and no.

Five engineers could be turned into maybe two, but probably not less.

It's the 'bus factor' at play. If you still want human approvals on pull requests then If one of those engineers goes on vacation or leaves the company you're stuck with one engineer for a while.

If both leave then you're screwed.

If you're a small startup, then sure there are no rules and it's the wild west. One dev can run the world.

This was true even before LLMs. Development has always scaled very poorly with team size. A team of 20 heads is like at most twice as productive as a team of 5, and a team of 5 is marginally more productive than a team of 3.

Peak productivity has always been somewhere between 1-3 people, though if any one of those people can't or won't continue working for one reason or another, it's generally game over for the project. So you hire more.

This is why small software startups time and time again manage to run circles around with organizations with much larger budgets. A 10 person game studio like Team Cherry can release smash hit after smash hit, while Ubisoft with 170,000% the personnel count visibly flounders. Imagine doing that in hardware, like if you could just grab some buddies and start a business successfully competing with TSMC out of your garage. That's clearly not possible. But in software, it actually is.