Character development is a convention of storytelling in which the writer makes time to portray the human side, motivation and other qualities of protagonists and antagonists, especially over the course of the plot.
It has been attempted many times in games as a writing technique, but rarely (if ever) with any success. Character development of the player's avatar usually ends up being didactic and speaking to the player as though here were a character (he is not). Meanwhile character development of another character in the game commonly results in periods of waiting for the game to stop talking to get back to play.
In games, the world is what develops and characters are (for the most part) just resources within it.