It was mentioned that app shortcuts will have total 5. But on my emulator, they are maxing out to 4. I tried both static as well as dynamic shortcuts. Is it a known bug?
The framework caps the number of app shortcuts to five. However, apps rendering those shortcuts can do whatever they want, including showing only a subset of those app shortcuts.
Google hints at this in the "Best Practices" section:
Although the API currently supports a combination of up to five static shortcuts and dynamic shortcuts for your app at any given time, it's recommended that you publish only four distinct shortcuts at any time to improve the shortcuts' visual appearance in the launcher.
My interpretation of this has been "the Pixel Launcher is only showing four". Other home screens, or other app shortcuts clients, can show one, two, three, four, or five of your app shortcuts.