<?php
$cat = mysqli_query($link,
  "SELECT DISTINCT `category` FROM `news` ORDER BY `category` ASC"
);
while($row = mysqli_fetch_assoc($cat)){?>
  <a href="#">
<?php if(mysqli_num_rows($cat) <= 5){
 echo htmlspecialchars($row['category']);
} else {

<a href="#">all</a>
}
?>
</a>

$cat = mysqli_query($link,
  "SELECT DISTINCT `category` FROM `news` ORDER BY `category` LIMIT 6"
);
$idx = 0;
while($row = mysqli_fetch_assoc($cat)) {
  $idx++;
  echo '<a href="#">';
  // если вывели меньше пяти строк или нет шестой
  if ($idx < 5 || !mysqli_fetch_assoc($cat))
    echo htmlspecialchars($row['category']);
  else
    echo "all";
  echo '</a>';
}