When you purchase a 5-developer license of Ext.NET, you are purchasing a single license for a team of up to 5 people to work with, you'll be getting a single key in the process. It identifies you and that you have a 5-people license plan.
If you have 5 developers, none of them will need to ever know the license key. But once you publish your website to the intranet or internet for your customers to use it, that deployed website (or websites) will have to have the license key on it/them.
Only the person publishing the website (for example, with FTP access to the production web server) needs to have access to the key (that is stored in Web.config). So if your developers are not directly allowed to access production FTP server, they may never know the key.
I hope this answers your first part of the question.
As for having more developers than you have purchased your license to, you'll be acting against the purchase agreement and this might incur a juridical dispute. That would be pretty much like using Ext.NET without a license at all.