I know some software was written on minis to run on 8-bit computers, but I have a hard time imagining that as the norm. My Apple II dev rig was two computers, one running development tools and one to test and they were two because running my software wasn't possible on the development machine without rebooting and loading all the tools took 30 seconds - a painful eternity in Apple II terms.
As confirmed by multiple interviews on the RetroGaming Magazine, almost every indie that managed to get enough pounds to carry on with their dream, invested into such setup when they started going big.
For consoles, it's natural - they don't have any self-hosted development tools and the machine you write your code with is largely irrelevant. Early adopters also benefit from the maturity of the tools in other platforms for the time before native tools are developed.
This may be more common in game studios, but was not mainstream in other segments.
