update dev instructions for jlab3

Author: ianhi

docs/source/installation.rst

@@ -49,4 +49,15 @@ For a development installation (requires npm):
     jupyter nbextension enable --py --sys-prefix ipycanvas
 
     # If you are developing on JupyterLab
-    jupyter labextension install @jupyter-widgets/jupyterlab-manager .
+    jupyter labextension develop . --overwrite
+    jlpm run build
+
+If you use JupyterLab to develop then you can watch the source directory and run JupyterLab at the same time in different
+terminals to watch for changes in the extension's source and automatically rebuild the extension.
+
+.. code:: bash
+
+    # Watch the source directory in one terminal, automatically rebuilding when needed
+    jlpm run watch
+    # Run JupyterLab in another terminal
+    jupyter lab