Question: How could a really intelligent species be kept from developing? For clarification, this species is the only creature of intelligent thought on the planet and they have a population of about 50 million across the planet about the size of the moon. However, they can't develop to the level that Britain reached in the industrial revolution.

Answer: 
They won't "develop" beyond 18th century fun anyway
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When I was playing war games in the universe conquering planets (yes we could) the primary goal of stage 1 colonization was to get yourself a "good" planet. That meant: a big one. You provide them with a natural limit on development already.

Below answer assumes your inhabitants have air to breath up there and there's good soil and a balanced population, so they may prosper.

**Pitfalls of small places**

X Y named some of these already. Development can reach a certain point in industrialization and it cannot go beyond that point anyway. Your planet is too small to contain relevant resources for energy and construction materials. Small moon-size planets generally don't have huge amounts of metals in their crust. When there exists any metal that can be mined, digging for it will be hard work for low gravity folks. Fossil fuel will be exhausted soon. For energy, they will require solar sats at an early stage and if they have not reached that stage of development, consumption and population will remain modest. A small population is *not* good for science, because exceptional talent will be rare.

**Distraction**

Your inhabitants will form a small community. It could have a strong cultural development and a weak economic development.

Low gravity is fun and it is difficult to perform any heavy work. As a result, your folks will remain thin and light weight, have a long youth and spend a lot of time jumping around and having fun. Development ? Tomorrow..

There is a fantastic sports culture on your planet. Every year, they organize a run around the planet, many inhabitants take part in it.

**How do they do physics research?**

The basics. How do they measure e.g. temperature with 18th century means ? It will require a lot of material to create a thermometer based on a gauge. The capillary action being much stronger than the down force will require more mass, the low gravity requires a huge gauge.

**Law and order**

For proper medieval law and order, low gravity is a hurdle too. You can't throw people off buildings and you can't possibly develop a guillotine. Lots of types of ballistic weapons can't be built (too much metal) or are useless because of the low gravity, or too dangerous to use. War won't develop easy.

**Quakes**

To make it more difficult, you could introduce some seismic activity. If you have that, it is quite difficult to maintain integrity of large constructs. Any quake will cause upward acceleration of huge amounts of stuff on the surface, which can be devastating.
No need to plan ahead
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In our history, complex civilizations developed where there was a need to plan ahead. In temperate regions, like Europe and China, people had to stockpile enough food and firewood to survive the winter. In the Middle East, they needed irrigation because of the arid climate. And in all the above cases, growing food was seasonal: there was one big harvest in a year, and that harvest had to last for an entire year. This required a complex organization of society, and that society needed to organize its protection, because if your neighbors had one bad harvest, they would either starve to death or had to try to raid you.

Compare this to tropical regions where you can pick food from the trees all year round, and although life as a hunter-gatherer is not easy, one does not need to plan ahead for an entire year. Humans there remained on a tribal level just as they lived tens of thousands of years ago, until fairly recently when they were contacted by more advanced civilizations.