They also have different scales for what types of events come when. For example, Casandra Classic aims for you to have 5 colonists. If you have less, you’ll get more opportunities to recruit. If you have more, raids get more violent and your colonists die easier.

The story teller is a very advanced and configurable difficulty scaling system that enables different styles of play. Mods even add in new story tellers to change the game focus entirely.

That's literally just scaling easy mode. But I recognize that not calling it that may have some good value in terms of player appreciation.

But the difficulty is separate from these characteristics.

Cassandra always tries to push you to 5 colonists. The events she chooses are separate from the difficulties or quality of the events.

The number of events / enemies are just knobs on the difficulty scale you can turn to create difficulty, and if you go too far back off. Lots of RPGs do the same thing, if an area is too easy increase enemies, if area is too hard decrease enemies, you can tune other stats too but fundamentally it's not really that different. The idea is to tune it so that the player feels like they are at the exact ideal power level, having a challenge but not frustratingly hard and not too easy either.

Roguelikes with random events have easy mode the same way, if they think you're falling behind the curve you're given events and powerups, they decrease if they think you're doing well. Because events are random this is easy to tune for the ideal difficulty.

I think most people respond much better to the idea of "storyteller" than "scaling difficulty" though, so it's an important innovation at least in terms of framing.

Are you sure it's always 5? On my playthrough I had no trouble growing to around 10. Didn't feel to be specifically limited to 5.