there is a neat traffic calculator built into lfs, start lfs, start a new host and once you're in the part where you chose how many players/packets per second you want to allow lfs calculates the needed upstream and displays it.
That setting determines the maximum number of people in a race on the host. E.g. a setting of 12 means the maximum number of guests who can race at the same time is 12 (assuming no AI are there). I don't know why you're just limited to 2 though, I started up LFS there and the default was 5. I can increase it to 32.