A plant grows new tissue from an apical meristem. The apical meristem is a group of cells that retain the ability to continue divisions, forming new cells continuously as the plant grows. This PRIMARY growth is responsible for growth in height. Woody plants have SECONDARY growth in that they have a special lateral meristem called the vascular cambium that allows for growth in diameter. The cambium makes large cells early in the year and smaller ones later in the summer. This cycling of large and small cells is responsible for the appearance of growth rings in the wood, usually one "ring" per year. So the answer is that they grow taller, then get bigger around.
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