What a 5% drop rate means is that, over the course of 100 attempts, on average you'll see the item drop 5 times. If you were to repeat this course of 100 attempts many many times, you'd see a histogram approximating a bell curve where 5 drops was most frequent, followed by 3 and 6, then 2 and 7, etc. It wouldn't be quite symmetric because you can't get fewer than zero drops.
I think this applies more to Gatcha than battle. 10 draws in Gatcha will get you exactly 10 things--the likelihood of getting one thing is directly related to the likelihood of getting something else (because you can't get both in the same draw). But in battle, the drop rates could be completely independent. You could get any number of chests, and getting one item doesn't necessarily affect your chance of getting any other item in the same battle, or even from the same mob. Or maybe it could, depending on the actual implementation in the game code.% rare item appearance increase - This means that the rate of appearance for normal loot is suppressed so that the appearance for rare loot can increase. Think of it as this way: the values must always add up to 100%. You cannot have 101%, or more, total (combined) rates.