What does iOS Settings → General → Usage indicate? In the image below, iOS shows some figures next to the app name.



I am not sure what this means. Does this indicate network used or disk space used by my app?

The problem is my app is not saving any data on phone. It is just using the internet and saving all data on internet only, but then this count is still increasing…
This is the amount of data the app is storing on the phone, plus the size of the app. If an app isn't saving data, it may be caching data of some kind. 

Without getting into code level details, this Storage pane is simply showing the space used by the sandbox (directory) that iOS makes to store each specific app and all the files, temporary files, preference files, caches and other assets as it runs.

Any user of iOS can look into some of the storage for each app using a tool like PhoneView but to truly look at all the files and determine which folders and files make up the 36.5 MB of the Testing_demo app (for instance), you will either need to jailbreak the iOS device and measure the filesystem directly or make use of the profiling tools in Xcode to analyze the writes made by your app.