Its an EU rule. It was not modified by the Withdrawal Agreement whereas the permanent residency rule regarding absence was increased from 2 years absence to 5 years.

What exactly does this 5 year rule mean? A person can deregister in Spain and live for 5 years in UK with UK tax responsibilities and no Spanish tax requirements ( maybe non resident status) then return within 5 years and take up previous WA residency without any need to reapply?

Yes.