A small working thing can be iterated into a larger, more complex working thing. I try to do this with software. The key concept is that the thing 'works' in all stages and stages are small. If one were building a four-wheeled vehicle with a powerplant of some sort, the analogy might be that a wagon is built first. Its got a chassi, two axles, four wheels, a pivot mechanism at each wheel to support turning. To iterate that into a full-sized vehicle, the chassi would be enlarged and hooks would be there to place a frame on top to create the interior of the car. An engine would be added, probably something too small to use but enough to go around the block and test rolling and steering and the gear and ignition controls.

Somethings cannot be iterated from one to another. The change needed does not lend itself to small steps. Changing a carrot peeler into a squirrel, for instance.