Muscles grow to adapt to stress put on them. If you put the same stress on them over and over again they will adapt to a certain size and strength and stop. That is why you have to keep putting larger amounts of strain in order to get growth. Accordingly the percentage of overload becomes less and less as you grow stronger. Therefore your muslce size growth becomes slower and slower as you get stronger. ie. when you first start lifting your muscles have no extra strain on them and therefore any weight is a great increase. Whereas when you say go from curling 40's to 50's that's a tiny percentage increase than from 0 to say 25's.
So to sum up your muscles do grow everytime you put enough strain on them to get adaptive regeneration from them. The results of each session of strain become a diminshing return cycle. Therefore your muscle grow but at a smaller and smaller amount with each lifting session. Then there is the old argument of genetic limitation (where you can only grow so much before your body stops growing muscle), but I won't get into that now.
Cheers,
Scotsman