I'm entirely confused. 4 people arrived on Day 1, but two of them were a day earlier than planned???

Were you responsible for all three rooms (e.g., Guest 1 on all rooms)? Or only one room? Did the two people who arrived early change their reservation so they'd have a room? It sounds like you were the registered guest for all of the rooms...

I don't get the luggage thing. I've certainly checked into a hotel where we had 2-3 rooms booked, but only one was ready, and the bellman had no problem dumping our entire pile of luggage into one room (at our direction, of course). There seems to be more to this part of the story.

Strict hotel fire codes aren't unusual in many parts of the world. If the room has a max occupancy of two, they'll often enforce it. I've been in places where this is done consistently enough that I actually believe the hotels when they say they can get fined for ignoring it...that is, it isn't just a "revenue enhancement" thing on the part of the hotel.