Every team that is building a product goes through several phases of team sizes and communication dynamics. Stage 1: Rollerblading ? When it's just you, building things is much easier, and faster. It's easier to communicate feature details by just sitting and discussing across the table, maybe sketching out on a whiteboard and then jumping straight into coding.
Sphinx is a well know really powerful documentation engine used extensively within the Python community. Sphinx typically is used to generate a set of static HTML pages from a selection of source files writing in reStructuredTEXT. reStructuredTEXT for those who are unfamiliar with it is similar to Markdown however it adds the concept of nesting.