I've seen on here numerous times the advice to advance prospects to MLB as soon as they're ready because they will improve more because of the better coaching. However, in tracking player ratings over 6 or 7 seasons, I haven't seen that. In fact, I have seen the opposite. Even if a prospect is 22 or 23, once I move them to MLB their ratings increase little, if at all. If I leave them down, they continue to experience good progress.

Am I wrong that they develop better if they stay in the minors longer, or is there some "hidden rating" that I'm missing out on when I promote my guys to MLB?

It's relative to their experience and potential development.

A 4 year pro, who might be 22-23, isn't going to develop much.
A 1 year pro, who might be 22-23, is going to develop better at the BL level because of better coaching.

With playing time. Sitting on a BL bench will not help either develop.

I watch the ratings increase following spring training as well. In my short time playing it seems that a decent bump in spring training means they still have some development left in them and could use another season in the minors. Of course, if it benefits my team to bring them up, I will.
As Mike said though, they need playing time. I would never bring a top prospect up to ride the pine.