Character development is vital in most stories (you might not get a whole lot of that in microfiction). Character growth, however, is not. 

Character development is showing, telling or revealing information that was true about the character around the time the story began. It is best incorporated organically throughout the novel—beware of infodumping at the beginning. 

This information can be physical (height, weight, scars, deformities, amputations, tattoos). It can be mental (gender identity or sexual orientation, in/tolerance of religion/LGBTQ2S+, an ism). This information may also apply to their intellect (they’ve completed X level of education, they’re extremely artistic, they’re affluent and influential yet clueless about the world). This information can also highlight their abilities, disabilities, deficiencies/acuities or mental/physical illnesses. 

It’s usually revealed through backstory, but can also happen as the story progresses (Author never established Character as racist, however on page 50, he throws down a microphone so he doesn’t have to pass it to a person of color). 

Basically, character development is establishing who your character is as of the moment the story took place. 

Character growth is showing how the dynamic of the character changes from the person s/h/e was at the beginning of the story to who s/h/e becomes by the end of the story. Someone who embraced everyone at the beginning might’ve learned to hate by the end. Someone who was conflicted in the beginning may embrace their gender identity by the end. Someone who planted evidence so they could get praise for their effectiveness against the war on drugs might spearhead the campaign against eliminating dirty cops and unjust incarceration.

Character growth is vital for character-driven stories, but isn’t necessarily for action-driven stories (except for middle grade and young adult where some character growth is anticipated, on account of the protagonist’s age/mental development). 

In a character-driven story, the protagonist’s growth is the arc. In an action-driven story, overcoming an external adversary is the arc. (More here.)

Now that we understand how these two terms differ, we can also see another slight difference: character development is something the author does, whereas character growth is something the character does. I wouldn’t say I grew my characters, I’d say I developed characters with interests, physical attributes and a code, and these characters then grow through their interactions and experiences (to the point where they are no longer the same in this aspect as who they were when the story started).

In conclusion, character development is aimed at giving a character dimension by revealing who the person s/h/e was when the story began, character growth is aimed at depicting how a character’s attitude, behavior, relationships or physical attributes meaningfully change during the course of the story. 

In a sentence, character development lets us get to know the characters whereas character growth allows us to watch them transform.