STM8L Timer 1 unexpectedly low overflow frequency
Ok, so the CPU is running at 16MHz.  You have a "count to" value of 1. The counter starts at 0.  After 1 tick the counter will be at 1, so the interrupt occurs and the counter resets.  

Second tick you enter the ISR and start pushing registers to the stack.  The counter increases to 1, so the interrupt occurs and the counter resets.

Third tick, you're still in the ISR from before, still pushing registers on to the stack, and you will be for the foreseeable future.  But you want it to enter the ISR again, and you're already there.  So the interrupt is delayed.

Fourth tick.  You're still pushing to the stack, the counter increases to 1, so the interrupt triggers.  The interrupt is already queued, so nothing at all happens.  The counter resets to 0.

Eventually, after many many many ticks, and missed interrupts, you finish the ISR and return to normal program flow.  Immediately the ISR runs again because of the delayed interrupt from earlier, and the whole cycle starts again.

What you are trying to do - run an interrupt every other CPU clock tick, is not physically possible.  Interrupts take time to execute.

You cannot trigger an interrupt faster than the interrupt takes to process.