Two parties means one or both can go to extremes pretty easily. If both do, people just pick one and the parties use votes to justify their extreme views. If only one is, it usually leaves the second party simply fighting against insanity (I think this is part of what we are seeing now: Bernie might be the start of a more extreme opposite to the other party). The parties also don't really have to have steady standards or party stance on things, at least not in the states. It more depends on the individual.

Multiple parties mean that more views can be heard. You can have a party with extreme views, but people can choose something different. Hopefully, there is a bigger range. The other thing multiple parties seem to encourage is working together and compromise. If you've 5 or 6 parties, it is harder for one party to hold up the government.

It isn't to say that a two-party system can't be what you describe, but it certainly isn't what is happening in the US right now.