by From Books Online
===================
Per Seat for
The Per Seat licensing mode requires a Client Access License for each
device that will access SQL Server 2000 Server. Per Seat is often more
economical for networks in which clients connect to more than one server.
In the edit box, select the number of devices to license.
No, your users would not be limited in any way.
But please note that you are limited to one change from per server mode to
per seat mode of licensing.
My comments would be...
The 5 users have independent licences once you switch to perseat.
As you add users, you will have to buy client licenses for each of the user.