It was a very small team with the goal of taking as much time as was needed to make the best game they could make, without pressure of time or money. Blow put all of his earnings from Braid into it, and the game grew tremendously as it went. In the end he got to make the game he wanted to make. It simply took time.
And he's been very transparent about it. The development blog is right here.
http://the-witness.net/news/
Updates start in 2009. I've been following it monthly since then.
Here's what the island looked like in May 2010.
August 2010.
March 2011. As of that update the puzzle count was 275.
Jumping ahead to December 2013. Puzzle count 595.
You can follow the development straight on through, from the development of the engine, visual design, puzzle design philosophy, how the game grew in scope as it went, etc. Final puzzle count is about 700.