I think it's probably partly that, but also partly inertia and fear. I'm sure it's scary to move on and make a sequel -- or an unrelated game -- that might not be nearly as popular as this (or might even bomb).
But keeping a game --
any game -- in development for this long is bad for the stability/longevity of both savegames and mods. Personally, I don't like having to choose between updating to the newest version to get the (now increasingly small) number of fixes and additions that might actually seem worthwhile (but having to start a new world to see all of these new additions), or staying on the old version (and thus getting to keep playing in my preferred world[s]) but having to forgo improvements. I almost never mod games, but I know throwing mods into the mix complicates matters even further in a game that still gets regular-ish updates years after release.
Oh, and then there's the fact that people that bought this game 7 or 8 years ago, and who were able to run the game fine at the time, might have trouble running it now on the same or a similar PC (even though I don't think the official system requirements have been updated).
And there's no legitimate way for anyone buying
Terraria in 2022 to play it as it was in 2012, or 2015, or 2019 -- and this game has changed
a lot over all the years since 2011. So a semi-permanent state of development is bad for preservation, too.
As far as I'm concerned, this game should have been finished up with a last round or two of bug fixes and technical/accessibility features 4-6 years ago. Iteration upon the same concept -- with lots of new content and gameplay features -- is what sequels are for. This precept also ensures that one can still play the older game, and it should at least be pretty close to how it was upon release -- which is not the case here, where the game has pretty much become its own sequel, and maybe a sequel to
that.