How does difference in loads affect current draw
Say we start at 5.5V with a series resistor of 1 ohm, that will leave 5V for the phone and limit to 500mA.


No. The resistor will drop 0.5V if 500mA flows. If the load draws more current, it will drop more voltage. If it draws less current, it will drop less voltage.

That means if your load doesn't draw a lot of current it will see higher than 5V which could damage it, depending on the load.

Similarly, a load could draw more than 500mA and it would just see less than 5V.

The resistor doesn't hard limit the current as much as it reduces the current for a set of conditions compared to if the resistor wasn't there.


  Why is that not happening with, say, LEDs? If you increase the resistance in series, the current decreases no matter how much current the LED wants?


The LED doesn't "want" current. It just wants a certain voltage across it. The current that ends up flowing is a result of that and interactions with the resistor. Any excess voltage from the supply that isn't across the diode must be across the resistor, and voltage across a resistor decides how much current flows through it, and if diode and resistor are in series then the same current must flow through both.