Before wheels, I'm pretty sure people used tree trunks to drag heavy objects from A to B. And I'm pretty sure the wheel's inventor hasn't envisioned the average consumer car we have today either.
Linus's point is that design happens at a micro-level, but at a macroscopic level the direction of a successful project should be made by trial and error with a feedback cycle.
To put things in perspective ... Linux is not designed for servers, it is not designed for desktops, it is not designed for real-time systems, it is not designed for mobile phones. When people wanted to use Linux for such stuff, they took it and modified it to their will, and the parts that slowed them down were eventually removed / refactored.
That's actually very true if you look at the history of many successful projects. And that's evolution more than design. "Release early and often" is exactly about this.