Only the exemption to the requirement, refers to the number of people.

OK, two peformers may not be having their rights restricted, but they are not exempt from the requirement because two performers are considered safe. So the grounds for the requirement preventing the performance cannot be safety.

The legislation itself i.e. the requirement for the public entertainment to have a PEL, is what is preventing the performance/free cultural expression.

That is my understanding, but I am just the banjo player.