Holometaboly (adj. holometabolous). Development in which the insect body form abruptly changes at the pupal moult; complete metamorphosis.
But it is so much more than that.
The immature holometabolous insects are called larvae. These larvae go through several instars, or moults, each time growing larger until the pupal instar. The pupal instar marks the massive physiological change between larvae and adult. Most notably, only adult insects have wings (if they have wings): larvae never have real wings. Pupation can occur in a cocoon, or with the insect open to the elements. It depends on the bug.
There are, of course, several reasons that such a complete metamorphosis evolved. The most obvious reason, that most of the 'higher' insect orders are holometabolous is food. Complete metamorphosis means that larvae and adults share different environments and have different mouth structures. This means they are eating different food.
This means that they are not in competition for food.
Think about it. If it came down to you versus a three year old going for the last donut in the box, who would win? Insects aren't altruistic when it comes to a food source, especially when it is a competitor to whom any genetic relationship is unknown (social insects aside, such as the Hymenoptera, but in those cases the adult workers feed the young specifically).
Holometaboly is not some final stage in insect evolution. It is one of many working methods for some insect orders to survive this crazy little game called life.