It would increase slowly over the courser of the game. And some actions would increase it drastically. One being a power/transformation you could use in battle, which made Ryu insanely powerful. You could double, triple, quadruple, etc your power in battle which increased a certain amount of %.
But that all comes at a cost. There is no way to lower the % number. It only goes up.
So they essentially give you near limitless power at your disposal from the start of the game. But you have to calculative or cautious with how you use it. For most bosses, I never made use of that power at all.
Another interesting system was a rank assigned to all the people in that world. Certain doors would be locked behind a certain rank. Once you beat the game, you'll be assigned a new rank, and can go through New Game + with that rank, giving you access to new areas which would prompt new cutscene and events, explaining more of the characters backstories.
I'm not expecting Capcom to revive this series any time soon sadly. I hope I'm wrong though.
That game was so good, from the setting to the way the story develops its really eerily beautiful. It has that "melancholy" feel to it. Bosch was such a good villain as well, and the increase in the D-Counter really makes things tense, specially when you are struggling with a boss and want to use a transformation.