Bunch of twitter devs buzzing about this, but only site running the story seems to be kotaku. This sucks for those dudes, seems like to me like they're downsizing to make smaller experiences like other indie studios which I always seemed to me like more in their wheelhouse. It wasn't until they really expanded that some of their games got a bit misguided.
Please go check out their kickstarter if you haven't already, it seems really cool. Diablo style game with small scale RTS mechanics, cool artstyle and skill tree ideas.
UPDATE Chris Taylor made a kickstarter video explaining the layoff. If the game gets funded he'll hire the team back.