This is a very simplistic and general way to look at it, but: First, there’s a huge difference between developing and repairing. We have a finite amount of certain cells, with finite lifespans. When nerves/nerve cells are damaged they often cannot be repaired because the body has no way of repairing them and nothing to replace them with (this is why stem cell treatments are so promising because stem cells are essentially blank slates that can be used to repair/replace any body cells, but it is incredibly difficult to get them to turn into whatever we want them to and there are a lot of modern hang ups about using stem cells so research in certain countries is slow going or nonexistent). However, development is a process that occurs as part of the lifecycle of those specific types of cells. Just like how you develop from a clump of cells in the womb, these stem cells begin taking on different functions and developing different parts of your body as part of their lifecycle, if there is damage or disruption of the development it is often permanent, such as when a baby is born without an organ, the body doesn’t just replace that organ when it’s developing because something caused a disruption in the development, because the process has been stopped, the lifecycle of those cells was ended prematurely. There is SOME cases where the body can compensate for damaged areas by developing alternate pathways (such as creating new vessels to transport blood, or training different areas of the body to compensate for a function that was lost), but when you have a nerve pathway severed or severely damaged there is no process in the body to form new pathways to conduct those signals. So put VERY simply they can still be developing because that is a part of the cells’ lifecycles as they were formed, but once they are damaged those damaged/destroyed cells no longer have the ability to continue developing because they’ve been stopped In their processes.

EDIT: I will also add that “the nervous system” as you discussed it in your post seemed to focus on the central nervous system, which really has no regenerative capabilities whatsoever and even stem cell research has not (to my knowledge) discovered any real way to use these stem cells to regenerate components of the central nervous system, whereas the peripheral nervous system does have some abilities as far as repair and regeneration go (but is still limited). So your PNS can repair to some extent such as when someone Injures their hand and suffers temporary loss of sensation or tingling/pins and needles which overtime, in some patients, repairs and the peripheral nerves are restored to somewhat normal function. But the CNS really is like you described it for the most part, where an injury to the CNS is lifelong and incurable