An excellent question posted by Fern of Life on the Balcony, a fun blog which shares her adventures in container gardening:
Why is it better to transplant a plant into a series of progressively larger pots? I’ve seen that recommended in books, but they never say why it’s better than a small plant potted in a big pot (other than the obvious point that a tiny plant in a huge pot would look ridiculous).Garden experts tell us that when we’re transplanting shrubs and trees into larger pots, we should transplant them into a slightly larger container rather than a much larger one. So if you want to get a Japanese Maple with an 18″ rootball into a 24″ pot, it’s best to transplant it once into a 21″ pot, and after it’s filled in, move it up to the 24″ pot. But why is that? The simplest way of explaining it is that if the pot is too large, the ratio of plant roots to soil will be too great for the roots to absorb all the moisture after watering, which leads to water sitting at the bottom of the pot and causes the roots to rot. Even after learning about that in Hort school, I still wondered, “well, why wouldn’t the extra water just drain out?” But the issue is one of surface tension and the fact that your potting mix is meant to hold water – because of those two factors, for which we are quite grateful on hot summer days, not all the water can drain out. If your plant can’t drink it up quickly, the pot becomes a haven for bacteria and fungus.