The development of characters mostly revolves around things called Experience Points (EP). These are used to increase Characteristics and Special Skills, but they can also be used to modify a character's AV momentarily. EPs can be awarded at any time, but usually it is good to award them after some notable success has occurred. The following values are given in order to form a picture of how much EPs are awarded for each situation in relation to the others, and therefore give the GM an impression of how to award them.
Playing in character should be awarded with 1-10 EPs. It should be awarded only once in a playing session and usually at the end of it. The amount of EPs awarded is based on how well the player has succeeded in capturing the personality of his character. For example, a nosy character is likely to poke his nose where it doesn't belong even in clearly dangerous situations. Keep in mind that the player decides what his character is like, not the GM. Also, the species descriptions are general for the whole species and should not dominate this issue. For example, a stoat should not gain less EPs even if he is not quite as lazy as described.
Whenever a character makes a critical success in whatever he is doing, he gains 1 EP. This should be awarded right at the time of the critical success.
It is advisable that during a one day session of playing the character has gains 10 to 25 EPs, 15-20 being the average amount (if the main objective wasn't achieved). But the GM is advised to modify this when needed. Development rate is a topic in which the GM has to rely highly on his/her decision. It is a demanding task to balance the rate of characters' development to their players' abilities, the scenario's or campaign's length and other demands etc. It is not good to let the characters develop too fast or slow. Players become frustrated in both situations. Some GMs prefer to let the characters develop relatively fast at first, and then slow down the progress to prevent characters from becoming too strong and the players from losing interest.
A character can trade 10 EPs for 1 point to any Characteristic except SIZ and additional characteristics (which are based on the Characteristics anyway). He can also trade 10 EPs for 1 point in any Special Skill. If the character doesn't have a certain skill, he will gain that skill with a value of 1 by trading 10 EPs for it.
Sometimes it is wise to limit the amount characters can develop. The value 20 in any Characteristic or Special Skill can give miraculous benefits, so it can be useful limit in a game that is not meant to produce super heroes.
EPs can also be used to modify the AV value in any success check. The AV can be increased or reduced by 1 point for each EP spent. This effect is not permanent, it only affects a single success check. Also, the amount of EPs used must be declared before making the check, but the GM must also tell the the opposing DV before this declaration. It can be wise not to spend all your EPs increasing Characteristics and skills, but to save some for tight situations where you can modify you AV with them.