Only one player uses the tablet. The other 4 players use standard Wii remotes.
It actually makes for some interesting game mechanics. Nintendo Land (the game that came with my WiiU) is basically 12 demo games bundled together, and they all do something with the tablet. In Mario Chase, you play hide and seek. The guy with the tablet hides, the guys with the wiimotes seek. The seekers can't see the hider's screen, but they can see each others'. In the Zelda game, the guy with the tablet is an archer, and uses the tablet to look around. The guy(s) with the wiimotes are swordsmen. In the racing game, you steer with the tablet's accelerometers. None of the games are very complicated, but Nintendo Land has replaced Wii Sports as the party game.
I really like Rayman Legends on the WiiU. Some of the levels really make use of the tablet feature, especially in two player mode. The guy with the remote runs the dungeon, and the guy with the tablet uses the touch screen to manipulate the dungeon. It requires a lot of communication between both players, and I think it's really well done. This is the game I point to when people ask why a console needs a tablet. Penny Arcade talked about this game a couple of times, and I agree.
I did end up buying one WiiU Pro controller. All of the functionality of the tablet controller, without a screen. For some of the games my kids play (Transformers), the tablet would always beat the wiimote. The Pro controller restored the balance between the players. It's also more comfortable for long game play than the wiimotes.
TL;DR: I wasn't planning to upgrade to the Wii to a WiiU, but I'm glad I did.