I don't know Intel's specifics, but often there's only a few chips that a manufacturer makes... and depending on the Quality / testing of the chips... the chips are binned into different categories.

As a hypothetical example (I'm not 100% sure if this is how Intel does things), and i5 could just be an i7 except it couldn't handle the higher clock rate. So instead of throwing away a chip that's limited in clock... Intel will sell the chip as an i5.

Or perhaps in another chip, the hyperthreading portion got borked because of a piece of dust landed in the lithography. So instead of selling it as an i7, the hyperthreading portion is fused off and the chip is sold as an i5.