Why do dialects develop?

Mostly isolation.

For example, in Norway where I live, each area has a dialect that can be very different from other places even close by. Some of them are hard to understand between native Norwegians, they can be that different.

This is because before the modern age when transportation across the country became widespread, many people lived in their own villages and cities and rarely left. Natural barriers like mountains and fjords made travel very difficult. This means the language evolves (like all languages do), but not in the same way as the next town.

Even without the natural barriers, groups of people with similar culture/background/beliefs/etc tend to stick together. The language evolves according to their needs. If they immigrate to another place, a new dialect can be formed as the language evolves further from the home group of the dialect.