The term character development can be a little confusing. It sounds like character invention; you're developing a character to fit into your story. But that's not what it means. And if a reviewer or agent is telling you that you lack it, you've got a problem.
Every good story needs character development. How do you know you've got it in yours?
With any book, you want to create characters with whom the readers can relate. Without that, they won't connect with your book and they probably won't like it. So as a writer you spend a lot of time thinking about the main characters in your stories, who they are and what they look like and how they talk.
Here's the trouble: your characters can't be the same at the end of the book as they were in the beginning. You've got to show character development. Without it, the audience isn't going to relate.
Human beings (and I'm referring to the ones who live off the page) are never static. They are constantly taking in new information every single day, learning something new or honing their skills in a particular area of expertise. You can see the proof of it for yourself. Open up your files, and read a little bit of that last thing you wrote. Now, go and find something you wrote at least one year ago.
You're better at it now, right? That's because you, too, undergo character development in that your own character develops over time. The same thing has to happen to the characters you put on the page. In any good book, there is some plot. Events will occur. Interactions will happen. Your characters will meet new people, learn and do new things. Like real people, their personalities and world views should change accordingly.
That's character development, and every good book has got it. Show that your character is learning and adapting, that they are changing because of the events that are happening to them on the page. Show growth. Do it well, and you'll find that people enjoy your writing much more.