Let's say you have parties ranging from liberal to conservative - parties "A" to "E."
In an election Party A's candidate gets 15% of the vote, B 25%, C 24%, D 8%, and E 28%.
You are a socialist so you vote for Party A's candidate. However, assuming a plurality = a win, Party E won. You'd be much happier with Party B or C than the ultra-conservative Party E (and so would most voters likely due to the spread of votes) but you socialists are stuck with them.
This problem could be solved partially, but likely not entirely, with runoff or, more so, instant runoff voting. However, there would be other problems in terms of actual votes on legislation, appointments, etc. with parties voting for/against legislation for different reasons. Due to this, coalitions would form and it would naturally flow back to an essentially two-party system. But the majority's views may not really be represented in the meantime (though whether they are or aren't already is certainly debatable).