openSUSE is a free and open source project with lots of sub-projects and software development happens in all of them.
The most prominent sub-project would be the openSUSE distribution which consists of around 3500 applications, libraries and utilities. All of them are cared-for by openSUSE Package Maintainers who integrate, polish, update and maintain them. Maintaining packages is the bread and butter development task that is done in the openSUSE project. Nearly everybody who somehow develops has at least one package he maintains in the openSUSE distribution. All of this happens in the openSUSE instance of the Open Build Service which is an open and complete distribution development platform that provides infrastructure for package maintenance and more.
Some of those packages contain applications, libraries or utilities that are openSUSE sub-projects by themselves. The most prominent here would be YaST - our powerful installation and system management tool. These are the projects were you will find software development in its more traditional form. A source code management (SCM) system like svn or git where developers contribute code to.
A relatively new, but growing, area of development is creating customized distributions. Your software and everything it needs, in one appliance. Demo CDs, perfect for tradeshows and hand-outs. A custom distro, with your own software and branding or Virtual machines, for the data center and the desktop. The base of these efforts is a Tool called KIWI which is an operating system image solution based on XML descriptions of distributions.