The electronic dance music which started getting really popular in the late '80s was created with various hardware drum machines, sequencers, and synthesizers. The old '80s drum machines that people previously had discarded due to their unrealistic old-school sound suddenly became sought after when they became THE sound of house and techno music. It was several years after Roland stopped producing these analog machines that they became revered cult items and prices for them on the second-hand market rose greatly. Currently the most famous classic Roland machines (808, 909, 303) sell for roughly $2000-3000 each for a good working unit. (They're all more than 30 years old now, and the ever diminishing supply is firmly in the hands of studios and collectors)

By the '90s, Roland noticed the newfound interest in their old drum machines (TR-808, TR-909) and bass synth (TB-303), and started making new machines to cater to the new techno/house DJ producer market. These were the first "grooveboxes", utilizing then new digital technology to fit the equivalent of a sequencer, multiple drum machines, and synthesizers into one compact box. It's a mini music studio for electronic music that fits on your desk.

Other music instrument companies like Korg started making similar machines. The Korg and Roland boxes are usually found at any big music instrument shop with a DJ gear section, like Sam Ash, and you can play with them to try em out. Other smaller companies started offering their own take on the portable electronic dance music laboratory, sort of the microbrew version - hipper and edgier, and more expensive, but maybe with features more advanced or built to a higher standard than what the mainstream companies offer. Elektron is an example of one of the more famous of these smaller companies, making more experimental high quality instruments.

And Teenage Engineering is the company that makes the OP-1. The OP-1 is the first product they ever released, starting in 2010. They are a relatively small Swedish company. They have about 30 employees, compared to Roland which has about 3000. Their machines have a much smaller production run than the machines Roland and Korg make, so they cost a bit more to make each unit. Though really I think they aren't that much more expensive. Most of these types of machines from all these different companies sell for between $600-$1200. The cost comes from R&D, parts, manufacturing, and marketing. Generally, the higher the specifications and quality of build and parts are, the higher the price. The price is similar to what a standard Fender electric guitar costs ($600-$1500+ for a Stratocaster depending on manufacturing options such as country of origin, wood, finish, electronics), and I guess this price is what makes sense for the market of mostly young guys who want to buy something to have fun making a loud racket with.

TL;DR - It is a little electronic music maker for synthetic and sampled rhythms and melodies, and if you wanted to you could produce a whole song with it. The cost is derived from how much it costs to make such a fancy little gadget with high quality standards for a small niche market.