Development Hell is a rare Random Dungeon that can be found in Act I. You need to have access to the cemetery, so the minimum requisite is the Shattered Crown quest. If the game you're playing has rolled for the dungeon to appear, you'll find 4 crypts opened in the cemetery, instead of the usual 3, as you can see from the following screenshot (the crypt is clearly marked as "Development Hell").
As you can see from the video you've linked, you don't need to kill Leoric(they're still searching for the chancellor's altar). Also it looks like a single player game, but it can also happen while in a party,as you can see from this image:
There have been various reports of its occurrence in Nightmare, Hell and Inferno difficulties. It still has to be found in Normal, but my guess is that it cannot happen at that difficulty.