In an Agile context, Incremental Development is when each successive version of a product is usable, and each builds upon the previous version by adding user-visible functionality.
Nearly all Agile teams favor an incremental development strategy; in an Agile context, this means that each successive version of the product is usable, and each builds upon the previous version by adding user-visible functionality. These are called “vertical” increments (that is, difference between successive product versions), as opposed to the opposite strategy which successively delivers complete technical components: for instance, creating a database schema, then building business rules on top of that, and only then implementing a UI. (This article offers a typical illustration of the distinction. It echoes the “layered cake” metaphor of software architecture: one can either cut along the horizontal layers, or vertically across them.) It is difficult to imagine an incremental approach in the Agile sense which is not also iterative, at least to some extent, but the two concepts are not identical. (They also prove surprisingly difficult to pin down, and are often the subject of heated semantic debates.)
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