Option 2. It was interesting to read comments on Town after its reveal, lots of inflated expectations that calmed down later. The reality was that it's small in scale and an eShop exclusive. Which shows how short on staff Game Freak is when they can't work on anything bigger than that and Pokemon at the same time.
Where does it confirmed that Town is an eshop exclusive?
I don't understand Game Freak lately. Their Pokemon games on the 3DS were nowhere near visually impressive, and were filled with performance issues regardless of whether or not you used the 3D effect (if it was even in the game). They keep releasing side projects, which is fine and dandy if you have a excess of staff, but they don't. It makes even less sense when their main franchise brings in more than enough profit to pay for an excess of staff that could work on side projects and help polish their Pokemon games.
I'm still looking forward to the Pokemon 2019 game, and I did enjoy Let's Go for what it was, but I'm starting to worry if there is some kind of structural/leadership issue that's holding the developer back.
They have about 143 employees and have posted job openings for their upcoming projects. Plus, you also have about 110 employees from Creatures, Inc. (although they've only helped out in only one pair of the main series games, X and Y, as they've done mostly spin-offs). It's not bad, considering Zelda: Breath of the Wild took about 300 people to complete the game within about 5 years and about 200+ staff for Mario Odyssey in about 4 years.
And it probably boils down to do they really want to expand to about 200-300 people or more? Higher number of staff does not necessarily mean bigger and better projects. I mean, Nintendo themselves have an employee count of almost 6000 and they still had some contractors to help with Breath of the Wild's development (along with Monolith Soft helping out as well) that, as I said, was completed by about 300 people. And even then, some here and other forums believe Nintendo still needs to have more staff on board.
Hell, Monolith Soft completed the Xenoblade games and they currently have an employee count of 184, and they had to share some of the staff who helped out with Breath of the Wild while Xenoblade 2 was in development. Of course, they build a new building but that's probably because they wanted to. Game Freak can create games like Xenoblade with the staffing they have as Monolith Soft did. It just all depends on how they want to go forward with their games, especially now HD development is a thing. Pokemon Let's Go, more or less, is considered a test game for Game Freak as their first HD Pokemon mainline title (regardless of how many times we have to debate this).