About/What Is Contract Development?
For the purposes of this site, "contract development" refers to any game development performed by one company for another (usually under contract). For example, a publisher might contract an outside developer to create a game, rather than develop it internally. This practice can also be referred to as "outsourcing."
"Why would a publisher contract another company to develop a game?"
Unfortunately, not many (if any) people from the business side of the game industry have been interviewed about outsourcing, so we can only speculate as to the reasons behind the practice. One reason might be lower development costs. Also, some publishers did not have their own development teams.
"So what's the big deal? Aren't developers usually credited in games?"
That may be true today, but that wasn't necessarily true back in the 1980s and 1990s. Even if a game had credits, many of them used pseudonyms instead of real names. And if the development was handled by an outside company, the name of that company was in many cases never revealed.
"Why did this happen?"
This was most likely to keep other people — really, other publishers — from knowing who developed their games and hiring them away.