Iterative development breaks down software development into smaller chunks called iterations. In each iteration, features are designed, developed, and tested, with additional features added in subsequent iterations until a fully functional application is ready. The iterative process follows the ADCOT principles of analysis, design, coding, and testing. It progresses through phases of inception to identify high-level requirements, elaboration to deliver a working architecture, construction to incrementally develop features, and transition to deploy the application. Iterative development allows for backtracking and modifications between iterations, in contrast to the waterfall method which completes each development step in full before moving to the next.