Occurs when the GM or system overcompensates for character growth, so that any new powers or improvement is exactly countered by new antagonists and challenges, leading to a zero-sum change. Rules obfuscation can help with the perception of this.
Part of the criticism levelled against Dungeons & Dragons 4th Edition by its critics.
Seems like it could be part of a zero sum game, where all forces shall reduce each other. But yeah, it's an illusion that characters are getting better when they don't.