Iterative and Incremental development are two different things when it comes to software development. They are, however, not mutually exclusive to one another and thusly why IID is interative and incremental development.

An iteration is a segment of repetition. If I were to do an iteration in programming I would probably do the same thing over and over until a predefined time has expired or a certain value has been aggregated. In software development, an iteration means repeating steps to develop a set of functionality for the software. Probably analyzing, designing, coding, testing, and then deploying a functional feature.

To contrast this with incremental I would say that an increment is quite literally "additive" or "something gained". It is building upon something already existing to make it more than it was before.

Imagine you have a stalagtite hanging from a cave ceiling and below it a meager stalagmite. Each drop of water is an iteration while the residue left on the stalagmite is the increment. Iteration after iteration the water falls to the structure leaving an increment of sediment that hardens and eventually grows taller and wider.

In software development we might be creating a job posting software online. The ability to post jobs is a fairly large feature. We might consider an increment of posting jobs to be the ability to write a job description and an email address to send resumes to.

Later on, with another increment we might add the ability to put in a salary range.

Then job requirements...

then... well you get the idea.

Iterative however does not imply that you are adding onto something. You could simply be iterative making something new every single iteration.

Now why does it matter?

Well, adaptive or emergent software development is the act of building something then showing it to the customer and soliciting feedback. Then using that feedback to make the product better by improving it. The idea is that you never make the 'right software' the first time out.

When you write a paper for college, you usually write a quick rough draft. Then you submit it for peer review or these days you send it to some grammar software that reviews it for you. You might proof read it. Over and over you look at it and revise it. This is the adaptive part of you developing your paper.

Now take it a step further.

Try doing your paper one paragraph at a time. Write the first paragraph and then refine it. Try to make it better, more concise, and stronger. Read it again and again and change it each time until you think it's the finished product that you plan to turn in. Now write the second paragraph. Does the first paragraph still make sense? Read both paragraphs within the context of eachother. Revise them as a whole. Now create the third paragraph. Have a friend read it, or even have the instructor read it before you turn it in.

Take all of these ideas to software and you will understand the differences between incremental and iterative and how to apply them more enjoyably in your work.