what does "postage-stamp "mean?
People sat at tables, in booths, on leather love seats or on the iron stools lining the long paneled bar. Others took to a postage-stamp dance floor, just a scattering of them yet, to boogie and shake to the five-piece band currently doing a very decent job covering the Black Keys’ “Lonely Boy.”
Instead of the campy pirate costumes, the staff wore black skirts or pants and white shirts.
It threw him off. And though the former Katydids had been on the crumbling edge of a shit hole, he kind of missed it.2. does "the five-piece band"= a band composed of five people?
3. what does "shake to"mean?
4. what does "currently doing a very decent job covering the Black Keys’ “Lonely Boy.” "mean?

Question

what does "postage-stamp "mean?
People sat at tables, in booths, on leather love seats or on the iron stools lining the long paneled bar. Others took to a postage-stamp dance floor, just a scattering of them yet, to boogie and shake to the five-piece band currently doing a very decent job covering the Black Keys’ “Lonely Boy.” 
Instead of the campy pirate costumes, the staff wore black skirts or pants and white shirts. 
It threw him off. And though the former Katydids had been on the crumbling edge of a shit hole, he kind of missed it.2. does "the five-piece band"= a band composed of five people?
3. what does "shake to"mean?
4. what does "currently doing a very decent job covering the Black Keys’ “Lonely Boy.” "mean?

Answer

Describing it as a "postage-stamp dance floor' means the dance floor is very small. The author is using hyperbole by saying the dance floor is the size of a postage-stamp.
Yes, a five-piece band has five members.
'Boogie and shake' means to dance. 
When a band 'covers' a song, it means they play a popular song that is usually done by another group., in this case the band is playing "Lonely Boy" which the group Black Keys is famous for. So now the band is playing "Lonely Boy" and they're doing it well.