Yes it's stupid, but no that's not entirely how it works. When you uninstall it you deactivate that copy so you're back up to 4 again (IIRC). However if your HDD crashed without a proper uninstallation it might still count as an install. Though a lot of games that had this type of DRM had it patched out a while ago. Not sure if this still has it, especially through steam.
Or if you wipe and reinstall without taking the time to uninstall every single one of your games first, which is what most people do. Very few people can be assed to uninstall every single game on the off chance that one of them might have some form of install-limiting DRM.
Still it's well worth it. Awesome game, controls great with both the Xbox 360 controller AND with keyboard and mouse. I played almost the entire game with a keyboard and mouse.
It does sort of hold your hand; I did die a few times but it was mostly pretty easy. Then again I was playing on medium. On hard it's quite a bit more difficult since not only do you have less health, but the game doesn't give you a big flashing notification of when enemies are going to attack you so you can counter. You have to actually watch their movements and counter that way.