Its a kind of thing like the average number of hands per population is less than two. Seems counter intuitive, but when you think about it, it does make sense. One shouldn't relay on the expected value of people having two hands, for global population it's a tad lower.
People not looking for a job aren't included in that 5%, to be considered unemployed you have to be working less than 2 hours a week and looking for work.
More importantly that figure doesn't include the underemployed, those working at least 2 hours but looking for more.
The reason 5% is considered full employment is there will always be a number of people who are unemployed because they are between jobs, for instance their partner has moved or they are rejoining the workforce after pregnancy or even looking for their first job.