But that is just ridiculous. Why can't people between 5'0"-5'4" model too?
Ridiculous societal limitations
How tall/short are you?
Generally, people under 5'7'' can't be models (except for parts modelling) because most designers design their clothes for taller people. They do this because taller people tend to have long legs, torsos, etc which accentuate their clothes. When models are on the runway, the designers want people to be looking at the clothes, rather than the girls. If the models are all different shapes and sizes it detracts from the clothing.
In my personal experience, the clothes are the focal point of the entire show. If people sitting at the back of the audience can only see the top of a model's head they leave disappointed and without an appreciation of the fashions.
That's a runway requirement, and the runway "shape" is just a question of cost effectiveness and presentation. You need a certain amount of length for your design, but when you're pre-production, you have the economic consideration of wanting to use the smallest amount of fabric possible. You also want the greatest uniformity of body shape between your models as possible, so one model can be swapped for another if necessary with minimal garment alteration required. There's a lot more variety once you get away from runway.