From the documentation. The develop will not install the package but it will create a .egg-link in the deployment directory back to the project source code directory.
So it's like installing but instead of copying to the site-packages it adds a symbolic link (the .egg-link acts as a multiplatform symbolic link).
That way you can edit the source code and see the changes directly without having to reinstall every time that you make a little change. This is useful when you are the developer of that project hence the name develop. If you are just installing someone else's package you should use install