> Is BLE the only way for Bluetooth to have multiple connections?

I think (?) that it's possible with Classic Bluetooth too, but like everything else with Classic Bluetooth, it's kinda buggy and unreliable.

> I'm no audiophile but in my experience, the audio quality noticeably drops when multiple devices are connected (I've only ever had at most two at a time).

I haven't personally noticed any audio quality difference with two devices connected over BLE, but I've never tried to play audio simultaneously from two sources. My phone and my laptop both auto-connect to my headphones, so I usually have two devices connected simultaneously, but I only ever play audio from one at a time.