So, yes, that stunt is awesome and very strong, given the right circumstances in which it can be used. Yes, it might even be a little bit broken.
But yes there's things you can do about it to not have that be a problem, and I think there's a number of things you missed in how it gets leveraged.
I also don't think we need to play wording trickery to find ways to nerf the stunt. It's not necessary to say "five foes are just one if I count them as a group mechanically". We both know those are still five foes; that's putting mechanics first in a game that prioritizes fiction first. We also don't need to say there's a limit of three just because of the stunt's name. Both of these are sorta cheesy moves which might earn us some bad looks from players for good reason.
It'll help to recognise this stunt for what it is: it's the Swashbuckler in their element. They're about dueling multiple people at once and showing off, swinging from ropes and chandeliers like the Swashbuckler card says. This is where the character is just totally awesome and excels, and these situations are your opportunity as the GM to be a fan of them and hand them cool stuff to do. It's alright if the players wipe the floor with the opposition as long as everyone's having fun.
But that stunt's for if and when you put them in their element. If you throw nothing but hordes of enemies at this dude in environments full of useful doodads and flashy defense opportunities, yes he's going to do excellently at holding them off because he's meant to do that. Cheer them on when you do this, but don't just do this.
Let's talk about the stunt's relevant element
As you might be aware, stunts are balanced proportionate to how often they can be relevant. That's why we have a limitation for action, approach, and situation, and sometimes once-per-X restrictions and fate point costs. So let's talk about the situations this stunt has to key off that you should pay attention to.
When you're surrounded by two or more foes, use your surroundings to make a Flashy Defense at +1 per foe.
It has to be a flashy defense: Christopher talks about various kinds of defenses here. This means doing things flashily actually has to be valuable.
It has to be using the environment. He'll be doing rope swinging, pulling own curtains and waving those around, generally just looking awesome. Some environments won't present anything much useful to the actual threat you're facing.
Those last two points considered, you should be asking your player to describe what he's doing in the fiction. Listen to his description — it should be clear that whatever they're doing is actually flashy, and that whatever flashy thing they're doing is actually a valid defense. Sometimes he'll describe something that's not really flashy at all, or just not going to help. You can call out weak descriptions and suggest it's not going to work, and offer whether your player wants to do things differently.
A flashy defence isn't going to help you much if someone you walked right up to is just dropping a grenade at your feet, for instance. That takes being quick or clever. Flashy probably doesn't help when you're in the middle of a gang of ten murlocs and it might be hard to utilise your environment from there, and it's unlikely to help when your opponents are dire wolves who just don't care about anything you could actually do in your environment.
It has to be against multiple opponents surrounding you. If they're not surrounding you, or there's one or two of them, this stunt isn't very relevant.
It has to be a (usually physical) fight against foes. That bears emphasizing all on its own. You could well have loads of fate sessions without fights happening where this stunt is relevant. Fate does very well at things other than fighting, and those are times other players can shine and the swashbuckler won't be holding down the fort with ease.
Pay attention to these limitations, and don't compose all your opposition out of textbook examples of the exact scenario the stunt was built for, and you won't see it being used constantly and looking outright insanely good all of the time.
So how do you different things and challenge the swashbuckler?
The bad guys aren't just mooks who are limited to +2/-2. They can have six approaches up to +3, you can put opponents up higher to +4 to give your players a serious challenge, you can have mooks that do more than just +2/-2. It's worth rehashing this as part of how challenging them will go.
Leverage mobs and teamwork to have your murlocs group together and act in unison to be more effective. You'll act with one murloc, with each extra murloc providing a +1 teamwork bonus to its roll — five murlocs now have a +4 bonus just from working together, versus the swashbuckler's +5 bonus to defense against them if his stunt applies. That won't be overcome so trivially, and will be just the one action for him to defend against (and possibly succeed with style on for one boost). The Fate Accelerated section on being the gamemaster points to this as an option for building sturdier groups of mooks beyond simply giving them a stress track.
(When you're not building mobs but have large numbers of enemies, you should use groups of mooks just because it's not all that interesting rolling ten different murloc attacks. Making them just two or three groups keeps the focus on your players' turns and is probably going to be more fun for everyone. It also makes for a more manageable number of actions either side might succeed with style on or need to spend resources on.)
Create advantages yourself sometimes that make it hard for him to effortlessly be flashy against everyone, like having someone toss out a smoke bomb into his vicinity. It's hard to be flashy when you're Spluttering in a smog. It's also hard to be flashy if you're Pinned down by archers or being Tied up. (All of these things can be done without having enemies present and surrounding him.)
Don't have all the enemies go after the swashbuckler and surround him. Have some go after the other characters; they've got no reason to all focus on the one guy. (People in real group fights will try to divide up their efforts, you usually can't afford to just ignore the people beating on you.) If they do focus on him, have them not always use surrounding tactics. Your swashbuckler doesn't get extra +1's just for the murlocs being in his vicinity, they actually have to be foes surrounding him in particular.
Narration that's distinctly to the player's advantage should (usually) come at a cost. You should encourage your players to help you narrate things, but when those things are distinctly to their advantage (like "that gang of murlocs is bunched up ready for me to leap right into the middle!"), that should require a cost such as a fate point or a create advantage roll. On the flipside, things they narrate that are distinctly unhelpful should probably be treated as compels if you run with them.
Speaking of compels, use those. Compel him for things to go south. When he charges in against a gang of ten goblins, offer him an event compel and say there's an ogre that was following behind them that's now showing up and he's trapped between it and those goblins. Compel that the curtain he's flinging around catches fire on a nearby candle and it's spreading to his clothes. Compel that the rope he's swinging on breaks and drops him in a terrible position. Compel him to slip off the banister he's trying to balance on and come crashing down on another player (who you also compel), putting them both at the mercy of something bad. All the ways the swashbuckler uses their environment are also ways for you to offer decision and event compels for things to go wrong. A lot of them could be quite entertaining, should the player accept and not buy them off. Don't over-compel them though to the point they feel they can't even use the stunt.
Do challenge your swashbuckler with single, strong enemies sometimes, even without a compel showing up.
Also, remember physical fights aren't always modeled with conflicts. Sometimes they're only worth a roll or two, a challenge, a contest, something like that. Your players will rarely (if ever) have an opportunity to use a defend action in those circumstances.
Don't just shut down the stunt though.
Your player's got a thing they can do well and they'd like to make use of it sometimes. Give your swashbuckler chances be awesome and flashily defend against all the things, and be a fan of them when they do so. Everything I'm saying here is just ways to not have him then go on to steamroll the entire fight and turn every opposing force into wet socks.
The Fate GM is there to also be a fan of the players, to help them be awesome, and help conspire with them against their own characters for everyone to have fun and dramatic stories. So, be supportive. If you're coming from D&D, super powerful features are often seen as a problem that needs fixing, nerfing, or to be totally stopped. Don't sweat it here — let those characters be awesome with their stuff, and give them opportunities to use it and have fun. The real issue is making sure people have fun and that the game is decently dramatic; features that suck fun and drama out are an issue players will be willing to resolve with you.
Remember combat is not the be-all end-all, it's just one possible thing you can do.
Fate handles all kinds of situations, and physical combat handled via conflicts is just one of them. There are entire Fate scenarios and games where you'll never get into a proper physical fight at all. Then again, nothing wrong with fighting — we've also had Masters of Umdaar games where every second or third session was primarily about physical struggles, and that's fine.
It's pretty common for players coming from a D&D background (such as yourself, I think) to focus the meat of the session on physical combat resolved with bloody violence and murder which, naturally, probably resolves all the worlds' problems if you do it enough. I did it, both the groups I play in did that, a couple of others I have friends in did that. The swashbuckler is going to do well defending in those fairly often.
If your players are in a surroundings like villages where most of the conflicts are social problems and awkward situations to resolve, or they're investigating a mystery and hunting down secrets and scaling towers and snooping on people and stealing things, or they're trying to escape from frankly frightening forces, or they're trying to prove their innocence of a crime they never committed, you're going to have a lot of sessions where no fighting happens at all and the conflict rules might hardly get referenced for a while. There's lots of fun, tension and drama to be had there.
Your swashbuckler's stunt is primarily relevant in fighting. If you have sessions full of fighting, they'll use it a lot. If you have one or two fights every few sessions, they'll shine every now and then but mostly have to also work things out the hard way without making groups of enemies look like pushovers. Try doing those other things as well.