These days Pixar are no stranger to sequels (despite for many years being extremely reluctant to return to popular franchises and properties). But you're probably wondering how the company went from having a title, plot and plan for a Monsters, Inc. sequel to instead doing a prequel.
Before Disney acquired Pixar in 2006 they set up Circle 7, a studio that allowed Disney to independently make sequels to Pixar properties without needing their permission or creative guidance. During this time, Circle 7 began work on a sequel to Monsters, Inc. subtitled Lost In Scaradise.
Lost In Scaradise was to see Mike and Sully return to the human world to visit Boo only to find she and her family have moved away. The two were then going to head on a perilous adventure through human society to try and find her. After the Pixar acquisition, however, Circle 7 was shut down and its proposed sequels canned.