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many reasons:
- because the whole point is working alone - at least for the dev part
- sometimes what seems to be great success - is only a critical success and not enough to create a studio or hire

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-I do understand people want to work alone but don't they want to improve?

-Agree, But whet about those who has multiple success projects? I'm not saying they should hire 100 people at least a small team of 3 in a small office everyone  start somewhere(Not saying it's easy but worth trying)

increasing the size of the team doesn't necessarily mean you will be able to make better games or faster 🤔
if you are not an idea man and you can dev  by yourself (and do the majority of the work anyway)
then it's a better idea to buy assets or pay people to make assets for you
because in the end it's the graphics that costs the most and takes the most time on a project
and you just don't get any real benefit from hiring someone full time or having office space
it's an old school practice but times changed: you no longer need a publisher now,
the internet got good enough you can work with people all over the world etc.
(so to sum it up: growing doesn't bring enough benefits to be worth it)

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true i have no experience to say more, as for publishers not all studios have budget for marketing so publisher come in handy i think 

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marketing seems to have the only trick publishers have left 
but the thing is marketing changed as well
how would you market a game nowadays? 🤔
especially a smaller game? (anything non AAA)
there are no gaming magazines, gaming sites are not really trusted anymore,
people don't watch tv, everyone is using ad blockers etc.
apart from hoping that your game goes viral by getting endorsed by some big time youtuber influencer
or building on band recognition - I guess a publisher that has a track record of publishing
great games previously might help - apart from that I just don't see what they can do 🤔

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Well publishers(Depend on the contract between you and them)they pay for marketing and for the development cost they handle Law stuff they even influence the Development progress(As far as i know)

that would be the ideal situation
but in practice as a solo dev you usually have very small development costs
so with a publisher you essentially just paying a bunch of people
that tell you that your ideas suck and you should implement theirs
and then somehow end up shipping your game prematurely
because they also set the publishing date 🙄
I guess I'm a bit cynical about the whole thing .. 🤔