Steric Inhibition of Resonance in ortho-substituted Benzoic Acids
Important information before understanding the reason for steric inhibition of resonance and the ortho effect

In general, resonance stabilizes a molecule. But in the case of carboxylic acids, the conjugate base (anion after losing $\ce{H+}$) there are two equivalent resonance structures.
Take the example of acetic acid, $\ce{CH3COOH}$, and thus acetate ion, $\ce{CH3COO-}$:



The hybrid would look something like this:



It could be easily seen that equivalent resonance structures mostly stabilise the hybrid greatly.
Therefore, equivalent resonance tends to stabilize a molecule/compound more than normal resonance. (in most cases)

Now let's take the case of o-toluic acid.



There are two ways by which resonance can take place:




In (I), it takes place through $\ce{-COOH}$. Its ion is expected to be more stable due to the above result. Also, here $\ce{OH}$ is highly polar and it will tend to lose $\ce{H+}$ to become uncharged and thus be more stable (as compared to $\ce{O-}$).
In (II), it takes place through the ring. Its ion is less stable due to more formal charge and less aromatic character (due to + on the ring). Also, $\ce{OH}$ is less polar than $\ce{H+}$ due to the above point.


Therefore, it will be better to prevent the taking place of resonance through ring.

That is done by $\ce{-CH3}$ group which provides bulky group repulsion and takes the ring out of the plane of $\ce{-COOH}$ and thus providing condition for equivalent resonance in $\ce{-COOH}$.