Iterative Development: Software is developed and delivered to customer and based on the feedback again developed in cycles or release and sprints. Say in Release 1 software is developed in 5 sprints and delivered to customer. Now customer wants some changes, then development team plan for 2nd release which can be completed in some sprints and so on.
Incremental Development:Software is development in parts or increments. In each increment a portion of the complete requirement is delivered.