Stretched cluster vs License vCenter Foundation

One of the limitations of vCenter Foundation is that you can only manage 4 hosts with it.
So if you have vCenter Foundation, and want to build a stretched cluster leveraging a 2+2+1 configuration, then simply add the Witness VM to the inventory as a host first and then add the rest.

This is documented in the release notes of vSphere 6.5 Update:

Licensing Issues

• Cannot add witness virtual machine to vCenter Server with Essentials licenseWhen the witness host for a stretched cluster is an appliance that resides in a virtual machine, it incorrectly consumes a host license. This problem occurs because the vCenter Server considers the witness appliance to be a physical host. If your license does not cover an additional host, you cannot add the witness appliance to vCenter Server.Workaround: Add the witness appliance VM to vCenter Server before you add the physical hosts.