Quoting from wikipedia:
The "law" of diminishing marginal returns says that after a possible initial increase in marginal returns, the MPP(Marginal Physical Product) of an input will fall as the total amount of the input rises (holding all other inputs constant)
Here are some of the examples from software development environment where we can see the above law in practice:
1. Addition of new team members to the project "seems" to increase productivity marginally but reduces over a period of time.
2. Developers excited about implementing the new technology, and after a while losing interest in it. For ex: implementing Webservices