Speaking for Germany, our parliament went from three parties (conservatives, liberals (in a European sense), social democrats) between the 60s and 80s to four (adding the Green party in 1983), to five (adding the Socialists, successor of the SED in the GDR) in 1990, to six right now (adding the totally-not-fascists in 2017).
Notably, both the conservatives and the social democrats, the two domineering parties, lost a lot of weight in the past decade or two. For the longest time, the question of who would be chancellor would boil down to "who can persuate the liberals to form a coalition?", although there has been a "big coalition" between 1966 and 1969, with a rather silly majority in parliament.
The next coalition without the liberals was formed in 1998 (social democrats + green party), followed by another big coalition in 2005 - due to neither SD+Green nor conservative+liberals having a majority, thanks to the socialists being relatively strong that election. Plus, the liberals were pretty decisively in the conservative's corner, same with the greens and the social democrats, so a triple coalition was more or less out of the question.
2009 went back to conservatives+liberals, but then the liberals were voted out of parliament for the first time in 2013 (so we're back to 4 parties), which lead to the third big coalition, because the socialists still remain pariah.
Then, 2017 the liberals came back to parliament and the totally-not-fascists were voted in for the first time as well. Since nobody wanted to continue the big coalition (both members lost a lot of votes compared to 2013) and both socialists and totally-not-fascists were pretty much out of question, it looked like a Social Democrats + Green + Liberals coaltion would emerge. However, the liberals pulled out of negotiations, which forced social democrats and conservatives to continue the big coalition for another four years.
The 2021 election was very interesting - with Merkel not candidating again, the conservatives did not find a strong candidate at all, plus a lot of bellyaching about how to position themselves to Merkel's relatively moderate policies, leading to their worst result since 1949. During the electoral campaign, it actually looked like a green chancellor (Annalena Baerbock, who ended up as foreign minister) would be in the cards, but she lost a lot of standing during the campaigns, benefitting the social democrats. This time, the liberals did agree to join a red-green-yellow coalition, so now Olaf Scholz is leading the government.
I've ignored the entire time that the conservatives are technically two parties in one parliamentary faction - the Christian Social Union in Bavaria and the Christian Democratic Union everywhere else, including the occasional "WE'LL DO OUR OWN THING!!!" screeching coming out of Munich whenever the Bavarians feel that they aren't sufficiently overrepresented. So technically, parliament went from four parties to seven. Anway, point stands, Germany has not been trending towards a two-party system at all. Quite the opposite, really.