Many do and many do not. DIsney will allow an extra in the room if one child is under 3, but I imagine that is not what you want.
I feel that there are choices if a family of five chooses to stay onsite, but if those choices do not suit, of course you make the decision to stay elsewhere. IMO, this is just one more aspect of vacation planning that every family encounters. You decide your budget in total, and then break it down between travel, lodging, food, entertainment, etc. Prioritize and go.
Our family is planning a pretty special trip next December. We are treating my nieces as their wedding present, and we know that it is going to be costly as there will be between 7 and 9 of us. That is a lot of lodging, food, and park tix. WE could rent a house offsite and all be in the same space, have our own pool, but that is not how we do Disney. So we save. I'll cut back elsewhere before we go. This is how we choose. I do not get upset that Disney Deluxe resorts are expensive. I do make a choice to save so we can stay in them.
WE often travel as an extended family and we know that our resort choices will tend to be more money because of that. I accept that, just as I accept that food, flights, and park tickets are going to cost more tha if we had 2.