In writing the post on Olympic bravado and all around anti-Americanism, I read this an article in Time Magazine about the French vs. American swim teams, the significance of which I did not appreciate until later.

The article wrote,

The French swimmers had promised to "smash" the Americans in the 4 × 100-m freestyle relay, but the U.S. men took the gold with a last-millisecond comeback by anchor Jason Lezak. The team--Michael Phelps, Garrett Weber-Gale, Cullen Jones and Lezak-- smashed the world record by nearly 4 seconds.

So that's impressive, but doesn't that mean that the French also smashed the world record by 4 seconds?

In fact, all of the medal winners beat the world record by almost 4 seconds.  Almost every country competing beat the world record.

Yet the difference between gold and silver was 0.08 seconds.

A cursory look over other events revealed this is not uncommon: everyone is suddenly a lot better than the best ever was, but they're still barely better than each other.

So how is it that from one Olympics to the next, there is such massive improvement, yet the difference between each team is still (to me) amazingly small?

It's not a case of the far right of the bell curve, where the most elite athletes are close together in ability.  In fact, the bell curve would predict that as you move further to the right, there would be fewer people with similar scores.

It doesn't happen in other areas.  The two richest people don't have anywhere near the same amount of money.  The two tallest people on earth are different by half a foot.  Etc.

My guess is that it must have to do with the competition itself, seeing the other competitors and pushing yourself accordingly.  But if that's the case, wouldn't the best thing for coaches to do is train their athletes in isolation, and tell them the other guy is six seconds faster than he actually is?