A Catalytic Converter (CAT) is made of many little cells where are deposited high value metals which will take care of oxidizing the gazes that were not fully oxidized in the engine. A 400 CELL Cat means there are 400 of these cells per square inch. As this number goes down, the amount of physical cells decreases therefore generating fewer constraints for the exhaust flows. The good compromise is often to use 200 CELL cats (typically 400cell is what is used by car manufacturers). If we go too low in CELL value, the oxidation process is not well performed. An engine check light will pop up and it is likely that if there is not enough back pressure you will have the same issues described in answer No2.
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