The main reason FPTP ensures at most 2 parties is that, say you have parties 1, A, and B, where A and B are relatively similar to each other. And say A and B are together more populous than 1, like a 40/30/30 split.
By splitting those 60% mostly-similar votes between A and B, both lose to the less-popular 1. It becomes in A and B's best interest to not cannibalize each other's votes, i.e. merge and dominate (or at least compete). The less fragmented ideology wins, not the most desired.
It's even more compelling during the formation of new parties when there are only 2: by not voting for one of the two dominant ones, you are literally throwing your vote away because it has no chance, and it's worse for your ideology than if you had chosen the most-similar of the dominant party.
