although a pound of muscle weighs the same as a pound of fat, the muscle is much more dense and fills a much smaller volume. When you are exersicing hard enough that muscle growth is encouraged, then a small growth of muscle has more weight than an equvialent amount of fat. Example a cup of muscle weighs much more than a cup of fat. So in order for a weght change to take place you have to burn a great deal of fat for a small gain in muscle.

A good exmple would be to take a feather pillow, remove a pound of feathers, replace the pound of feather with a pound of lead. Now it weighs the same but sure is a lot thinner!