I think it's also important to consider the nature of the project they were working on. It was a medium sized project that is applying already understood ideas (digg-like voting, wikipedia-like editing) and applying them to a new domain (programming), which the developers were very knowledgeable about. Also, it was building a website with a powerful and reliable development stack that they already knew so they could build it quickly. That type of environment lends itself nicely to small teams and quick turnaround times. And because the team was small and all the problems were well understood, there didn't need to be as much communication overhead, and they could overcome being in different locations. Finally, because their software only had to run on one machine which they controlled, a large source of bugs and complexity was eliminated.