Living in a multi-party country I can tell you a bit more. The downsides of 2 parties only is that if one party is in full power they can shape a lot. We can already see how the justice system is being shaped now by Trump for starters. It also makes people only think in extremes. Right republicans, and left democrats. Funny note the democrats are closer to left, but not nearly close to left enough to be labelled that way, when with two parties you got only two ways to think.
Now in the Netherlands were I live we got multiple parties. The most famous once are VVD (liberal party... Far RIGHT, yup, liberal is NOT a leftist movement and never was), PvdA (Social democrat. Moderate/far left), Groen Links (Green + moderate/far left), SP (Socialist party, extremely left), PVV (Populist idiot party who believe to be right), FvD (same is PVV, with with more expensive words and less foul language), 50plus (Focused on older people's interest), Partij voor de Dieren (Animal party. Focused on animal rights). ChristenUnie (Moderate left conservative, and Christian), SGP (Right conservative and christian). CDA (Moderate Christan, center). D66 (far progressive, center/moderate left).
We don't have electoral college, so the number of votes always corresponds to the number of seats won. The Dutch parliament as 150 seats so 76 or more is needed for a majority. Never in the political history of the NL that has been achieved by one party, so parties have to form a coalition with other parties. The big plus is that parties cannot gather all power to themselves and get things on the rampage in the extreme cases, as they always most compromise with their coalition partner. Downside is that sometimes things can get more complicated that way, and a lot of electoral promises (which are mostly lies from the start anyway in all countries) are already lost before the government is formed. And sometimes the electoral results can give bizarre situation, like the VVD having to cooperate with the PvdA (we call that a purple coalition) having the most rightist party having to work together with one of the most leftist parties. Surprisingly enough we did have some very robust governments back then, most of all under prime minister Wim Kok.
Another downside is that it can undermine the stability of the government. Many Dutch government fall prematurely, mostly leading to new elections before the term is over. --> TO BE CONTINUED!