Games just take too long to do that and it's not efficient. Minimum, you want to plan and have your next project ready to go while the asset creation and coding is underway for the other project. There's prototyping / writing, and then making it and they can be done largely separately or you're just wasting even more time.
When someone is done with their role on a project it makes sense to then place them on another project.
I doubt that’s what happens in this industry at a lot of studios. One day you’re working on assets for game A, then next on B. Then deadlines hit on both projects, crunch etc and it seems like spreading butter too thin.
I’d love to think I’m wrong and these companies are structured well in time management and making best use of a persons role but it’s just like any industry : overworked, underpaid, and run by ding dongs.
Yes, this is how it normally works: if the studio doesn't have other projects where the person can help once having done his job on the project, or if he can't move to a different position in the same project, they often support in projects of other studios (sometimes from the same company, sometimes an external one) until their next project is ready. If not, the person normally gets fired / his contractor job ends. They don't have people doing nothing during months or years.
As an example, we know that during decades Bend and ND helped each other supporting the other studio when had free people between projects.
In Ubisoft as another example their studios work in multiple games at the same time, and also help each other studio in a wider, studio way. And there are studios that like in ND and Bend case are used to frequently help each other. And even at personal level if you see that you'll end your job in the project and will be free and see an open job position for let's say 6 months or a year somewhere where you would like to go, you can ask to be moved there and then if you want to come back.
When I did work at Ubi there was one of our QA guys who did this, he moved to Ubi Milan (we didn't work with that studio before) to work in Mario x Rabbids during a year or so and then he came back.