If it's a public-facing blog, then it's all about the insight (or as Alex mentioned the perceived insight) into the developer's activities. For example, it's less frustrating for a user to know that a developer is hammering away at a bug, as opposed to complete radio silence while work is being done on it. Another major benefit is that the blogs can be used to release news (about new features, new ideas, events, etc) in a way that feels more natural to the reader than an all-out press release or something of that sort. It all just adds up to giving the reader "insight" to what goes on "behind the scenes."