It doesn't allow expansion up to 32 bits. How would that even be possible? Some of the bits are needed to indicate to use the second two bytes, so there's a hole in the range and it's less than 32 bits.
Decoding UTF-16 (with surrogate pairs) is pretty similar to decoding UTF-8 except the state machine is simpler (as it's just 1–2 code units per codepoint, instead of 1–3). It also means that if you validate that you have a high surrogate and a low surrogate, the combination is guaranteed to be a valid codepoint (whereas with UTF-8 there are invalid encodings, e.g. any 1-byte codepoint can actually be encoded using 2 or 3 bytes instead, which the state machine must reject).
"A surrogate pair can represent 20 bits, or 2^20 values. A single UTF-16 byte is of course 16 bits, or 2^16 values. 2^20 + 2^16 == 0x110000, which is precisely as many unicode code points as there are (0–0x10FFFF)."
This explanation can't be quite right, because the possible surrogate code unit values are carved out of the set of 2^16 code units. So you are double counting those surrogate code units.
From Wikipedia: "Since the ranges for the high surrogates (0xD800–0xDBFF), low surrogates (0xDC00–0xDFFF), and valid BMP characters (0x0000–0xD7FF, 0xE000–0xFFFF) are disjoint, it is not possible for a surrogate to match a BMP character, or for two adjacent code units to look like a legal surrogate pair."
UCS-2 is limited to only 16-bit representation, making it _impossible_ to express Unicode values outside the basic multilingual plane (BMP).
