As near as I can explain it (as it has been hinted at/taught) ...
Identity development is/are the steps one takes to form their own identity.
I for example, see myself as a woman, a person with a disability, a student and a daughter/sister. These are essentially all different identities, that interact to form your central identity, or how you see yourself as a whole person.
But yeah, identity development takes place (IMO) over a lifespan, and involves interactions with others and many other factors that influence how we see ourselves, or our identity.
I hope I didn't just ramble on without making any sense...