What is the explanation of law of diminishing return?

In the most general terms, you reach a point where a product or process has been improved so much that devoting more resources to more research and development will not translate into enough added gain to cover the cost of the added research. The idea can be applied to a wide range of activities where there is some increase in profit or benefit resulting from some increase of effort or product improvement. At some point, you decided that you have reached an optimum balance between what you are gaining and what you have to do to 'improve' your gain.