.001 is not a reduced grade of service over 0.05. It is a much better GOS. Instead of permitting 5 % of your calls to be blocked you are allowing only 0.1% to be blocked therefor more calls are ‘guaranteed’ to get through, so you need more circuits.
The number of circuits goes above the Erlang total because the individual calls average only several minutes (usually). You must allow for a small set-up and clear down time where the circuit is busy but not carrying traffic.