Especially since the release of Turbo Assembler in 1985, serious development on the C64 was quite comfortable.

Years later in the 90ies, Fairlight enhanced Turbo Assembler with REU support, which made development on the machine itself ridiculously comfortable. Basically the only thing missing I can recall was there was no concept of version management back then.

Of course, this came too late for professional development but it's basically what the demo scene ran on till cross assembling from PCs came in vogue.