There are 3 different ways to develop software using the yocto project: Building natively (on the target), using the SDK, and using the Extensible SDK.

See SDK

See Extensible SDK (eSDK)

This is the simplest but also least useful way to build packages for yocto. By default, there is no toolchain installed in the image.

To add the toolchain to an image, append tools-sdk to CORE_IMAGE_INSTALL.

CORE_IMAGE_INSTALL_append  = " tools-sdk"

Note that this will significantly increase image size and build time.