The main problem that arises with large multi-party systems is that the ruling party needs to form a coalition to govern and that may require cozying up to some extreme small party and giving them influence outsize of their numbers.
It seems to me that the two-party system in the United States is, practically speaking, the same thing. Within each major party there are smaller caucuses, such as the Freedom Caucus, which are more extreme than the party as a whole and exercise outsized influence because the larger party needs them to maintain its big tent. "Big tent" == coalition.