Hi OP,
Just to share what I am doing for my son's 5th birthday.
We are having the party in a hotel venue today. Granted it was pre-booked since February as I knew I was pregnant then and due anytime now, I didn't want any hassle and opted for the convenience of catering, entertainment...etc.
I initially planned to invite 25 to 30 children but due to pandemic, we were only allowed to have 30 pax maximum for indoor celebrations, same as weddings. So one parent per child, we had to limit to about 12 children (had to include entertainers too). So we cherry picked some of his closest friends, all from same nursery bubble (just started reception now).
Social distancing is required for the children too but we all know it is 'we will try our best' kind of scenario. No singing no dancing allowed, so rather than bouncy castles and such, I hired a magician and a mobile zoo. They had to be vetted and approved by the hotel's health and safety team. The entertainers themselves have risk assessment guidelines and I made sure both venue manager and entertainer agree to them. Seats for kids assigned and placed at least 1 metre apart. Parents seated on round tables with maximum of 6 pax per table. Rather than buffet, food is served individually to the tables. Rather than candles to blow, we use sparklers. No singing birthday song, we just play the tunes on speakers. Hotel host rang each guests day before to ensure no one has symptoms. On arrival, temperatures are checked, contact details kept just in case for contact tracing. This is as 'legal' as it gets IMO!
Last week we attended another birthday party, it was in the back garden. For that party, the host limited to 6 household guideline, but had bouncy castle etc, and not really socially distancing the kids. Just good old birthday party fun!
So depends what you want, really. From what I understand, if you plan to host it yourself, then there is the 6 household limit outdoors. If you can get a venue, then you have up to 30 pax limit.
Hope this helps!