Denmark is a little under 6 million people, there are currently 12 parties eligible for election. That not really uncommon, the Netherlands also have a fairly large number of parties.
It seems more crazy to believe that two, three or four parties can represent 80 million or more people. The truth is that many of the parties in countries like Norway and Denmark are all fairly similar. They mostly agree on the basics. Six of the twelve parties in Denmark are, in my mind, variations on Social Democrats. I'm sure many would disagree, but they vary on issues, that in countries like the US, would be considered implementation details or narrow topics.
That's much less divided than, say, the US, with its two party system.
Any party is much less likely to have a dominance, and they'd have to play along with the others to form a coalition.
I'd argue that this is much more what a democracy should be like and much more
representative of the wide range of people and voices that our countries (Norway, Netherlands, etc) have compared to the "divide-in-the-middle" politics that are common to the US.
Norwegians seem to me, an outsider, quite cohesive as a society. Much more so than just about any place i’ve spent time in. But they also seem to allow for a fair bit of diversity in certain things, politics being one — but only within certain parameters, so I suspect the differences between the parties are more around specific issues up for debate than big ideological / identity concerns, as they are in the US, for example.