The entire season for TWAU2 is being developed at once.
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Telltale Games is still definitely working on The Wolf Among Us 2. First revealed during The Game Awards in 2019, it has been roughly one year since we heard a single peep about what was going on with this game following Telltale's return.

Today, Telltale Games says that they really don't have much new to share at this time. They do admit that the game is still coming. The thing is, they are developing the entire season at once instead of doing each episode one after another.

Don't think of this as any sort of delay. There was never really any release date announced for The Wolf Among Us 2 after Telltale came back from the dead in 2019. There were previous announcements for a "Season 2" of The Wolf Among Us, but that was back with the "old" Telltale Games and should not be put into consideration for these new announcements.

"We know you're excited to hear more about TWUA2. And we look forward to telling you more when the time is right. What we can say is that we are developing the entire season at once and there is more to do before we're ready to share what's next for the Fabletown gang. It's just not time yet."
They also go on to note that while some of Telltale's former games have been brought back from the dead, not all of them will be as fortunate. The company says, "some games reverted back to the IP owners and their fate is not currently in our hands."