Character development is the whole idea of the book, NOT THE PLOT. The characters are derived from Woolf's real life friends and acquaintances. Each character's personality is complex and is unsentimentally laid bare.
The genius of the book is that it exposes the fundamental emptiness of Woolf's upper class social circle in London after World War I. Most of the characters, including Clarissa Dalloway, are trying too hard to fit in with their idea of who the British upper class SHOULD be. They desperately cling to their Britishness to give their lives meaning after the horrors and uncertainty of World War I. Then, for contrast, there are characters such as Septimus Smith, who has PTSD because he saw his lover (another soldier) get killed in the war, and who has completely given up on the value of stiff upper lip Britishness. And there's Elizabeth, Mrs. Dalloway's daughter who doesn't care about fitting in at all.
The power of the book is that the characters are so genuine and they shine a light on our own lives.
On the negative side, it really is hard to figure out what's actually going on, and I'd call that a huge fault; Woolf could have made it easy to understand what's actually happening just by adding a few more sentences, so that's irritating, but it doesn't negate the deep insight into the human condition.