DigitalOcean provides Cloud VPS’s (Droplets) which differ from standard Shared Hosting plans in that you’re not limited by the number of domains, databases, etc. Instead, you’re limited by the CPU, RAM and SSD Storage (disk space).
A VPS, unlike Shared Hosting, is a blank canvas which provides a barebones OS and that’s it. Beyond that, it’s up to you to configure, so you’d be responsible for installing the web server (NGINX, Apache, etc), the Database Server (MySQL, MariaDB, Percona, etc), PHP/NodeJS or another piece of software, or a control panel (such as cPanel or Plesk) if you so desire.
With that being said, you’re only limitations are the resources your Droplet is assigned. The 512MB Droplet is going to be limiting if you intend to install a control panel – if that’s the case, you’re really better off starting with a 2GB Droplet as the control panel software will easily eat up 512MB up to 1GB which would run your VPS at its limits on the 512MB and leave very little breathing room on the 1GB.
As for the number of Droplets, $5 will cover 1x 512MB Droplet. Anything more than that and you’ll incur the charges associated with creating additional Droplets; the cost depends on which you choose to deploy.
You only need 1x Droplet to start, which is what $5 will cover (which would be the 512MB), though as I tell everyone starting out, keep in mind DigitalOcean is not a managed service provider, meaning all things that fall outside of the network (i.e. connectivity – issues preventing you from connecting to or from the Droplet) or hardware (i.e. failed disks, RAM, etc) are your responsibility.