Babylon Five is the fifth station built as part of the Babylon Project. As we learn in the episode Grail stations One through Three were destroyed during construction, and station Four disappeared just after it's completion. Babylon Five, the focus of the show, was the final station built.
Were all five stations planned from the start or was each successive one built solely to replace the one before it?
There's an extensive Q+A on the Midwinter website in which JMS gives a number of key facts about the earlier Babylon Stations including the fact that the budgets for each station weren't passed until the previous station had been destroyed. Additionally, materials for each station were rolled into the next;
The EA has owned all of the Babylons; 1-3 were sabotaged early in construction, so it wasn't too much of a loss. They dumped a BIG budget into B4, and when that died, barely passed the budget for #5, skimping all the way. cutting it down to bare bones operating expenses. They will and would never approve a #6.
B1-B4 were located in roughly the same sector, with B4 using some of the materials from 1-3 leftover. B5 was constructed about 3 hours (travelling time in real-space) from the location of B4.
In-universe, Jinxo confirms this in the episode 'Grail'.
"The day I came to Babylon, we didn't number them at first"
Out of Universe, JMS stated that the series couldn't be called Babylon, Babylon 1, Babylon 2, Babylon 3 or Babylon 4 anyway because;
Remember the song "Babylon," (by, I believe, Donovan?) We did a titles search before we began production, and the title Babylon 1 has been used 4 times, Babylon 2 has been used twice, Babylon 3 appears in a copyrighted song title, and Babylon 4 has also been used (though neither copyrighted nor trademarked, so we've taken that step)
