New player, how does PBW work and would anyone like to start a new game?

Well for regular PBW basically you go into the lobby and find a game that is open and then you join that game. When you have joined and the game is full or ready to start, the host and the players will agree on the settings, although for regular PBW most of the time the host has set the settings(tech level, any AI, starting planets, etc.) rules, mods, etc already. Then based on those settings you create your empire and upload it to the PBW server either via email or on their site. After everyone uploads their turns, the host will process the first turn and after he uploads the first turn you will be emailed that turn and the game has begun! You will receive your turns through email, and if they are too big you can also download it off the PBW site. You basically download your turn, unzip it into your savegame folder, play it and then upload your PLR file which you will find in your savegame folder after you complete your turn.

The PBW site is here: http://www.pbw.cc/text/index.jsp?menu=mainmenu.jsp&body=mainbody.html

Also, I suggest you to join SE:V KOTH, it's like a ladder system for SE:V and the games get going fast. The site for it is here: http://koth.spaceempires.net/se5/

EDIT: One big thing that is different about PBW is that the turns are done simultaneously meaning that you have to queue everything and then it gets executed by the computer. I.e Your ship won't move until the server processes your turn, you can't instantly transfer units from planets to ships, etc.

EDIT2: I also suggest you to read these posts, they helped me A LOT in my PBW games.
An excellent guide - http://www.spaceempires5.com/en-US/node/2782
An excellent story about an empire - http://www.spaceempires5.com/en-US/node/3012

No, games can have any number of players.

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Space Empires Depot | SE:V Balance Mod

If i where you id join the KOTH league (can someone post the KOTH LINK?!) It's fun im in it right now and so are a few other people but its the easiest way to get a game =P

There is no head-to-head tactical combat in multiplayer SE5. The computer controlls all ships per the combat strategies the player assigns. Designing combat strategies is actually quite enjoyable, I find.

In SE5, TCP/IP mode is what you are referring to, where players are directly connected. It's a bit squirelly, and requires bug-fixing, I believe. (Combat is still not tactical with this mode.) Once it is addressed and fixed, I think it MIGHT be useful for 1v1 games, but as the number of players grows, its appropriateness shrinks, especially as player time zone factors in.