By looking at the keyboard, you're relying on vision to direct motor actions and detect errors (fingers in wrong positions, etc.). This requires the involvement of association cortex in, I believe, the parietal lobe, to integrate vision, somatosensory (i.e, touch), proprioception (i.e, body position) stimuli. The end result is that typing speed is limited by the processing speed of the cortex.

On the contrary, pure touch typing does not involve vision. Somatosensation and proprioception can be integrated in the hindbrain and spinal cord, and so touch typing can be done almost exclusively there, with only goal-oriented, "type this word" input from the cortex. Vision comes in later to detect errors, but because it is not in the loop, touch typing is not limited by it.