Organisers ask for a rough team size so they can plan. Knowing how many racers to expect affects everything from the number of waves to how much water is on the course.
Some organisers also use it to offer team discounts, where a bigger team means a lower price per entry.
You can always sign up more people than you estimated, because the number is not a cap. But if your estimate earned you a discount and your team ends up smaller than that, the organiser may charge the difference. If you think your team will fall short of the number you gave, contact the organiser directly rather than letting it run to the event.