… the question of how he does it is not answered by watching him at work.
This is from ‘Balanchine Choreographing’  found in Edwin Denby: Dance Writings, edited by Robert Cornfield and William MacKay (1986). I don’t think you need to know what “it” is in the first sentence (he had explained at length in previous paragraphs):
… At that first rehearsal, the choreographer did not mention that he intended it, or what he intended. Nor did the dancers ask. They concentrated on the moves he was making. They hurried to learn each figure as it was invented, to repeat it by counts, and to memorize the sequence by counts to the score. At the end of two and a half hours about one minute of the ballet had been made.
… Making a ballet takes an unbounded patience from everybody concerned. An outsider is fascinated to be let in on the minuteness of the workmanship. But then he finds no way out of that minuteness. Listening to the same few bars pounded again and again on the piano, watching the same movements started at top speed and broken off, again and again, the fascinated outsider after two hours and a half of that finds himself going stir crazy.
[line break added] Seeing a ballet in the theater one is carried into a world of zest and grandeur by the momentum of action and music. In performance the dancers look ravishing. In rehearsal they look like exhausted champions attempting Mount Everest, knowing how limited the time is, step by step, hold by hold, roped together by the music, with the peak nowhere in sight.
… At the start of the first rehearsal he chose a way of working which he kept until the whole piece had been created. At every point he took each role. The process looked like this. Standing near the dancer, he signaled the pianist to play ahead, and clapped his hands when he wanted him to break off. The pianist repeated the fragment once or twice while Balanchine listened intently.
[line break added] Then without music he took the position in which the dancer would have to start, and stood absorbed, sometimes turning his head very slightly in this direction or that, sometimes slightly moving his feet. He was inventing the next figure. He seemed to test the feel of it, and decide. That done, he glanced at the dancer, stressed the starting position, and without music showed the move.The first time he showed it, he did it from start to finish at full performance force and speed.
The dancers reproduced it, adding to it at once — in ballet style — the full extension of the body, the turnout of legs and feet, the toe step or leap he had merely implied. A nondancer might have wondered how they could guess so much; but they seemed to guess right almost always.
… looking for a new move he [Balanchine] seemed to find it by following an instinctive dance impulse of his body. Nearly always he trusted to his body’s first response, while he was concentrating on the exact force of momentum the music offered for the next move.
… This power of poetry has long been the glory of ballet, and Balanchine’s is that he succeeds in it so often. But the question of how he does it is not answered by watching him at work.