There are 2 different ways of working your muscles. Aerobic exercise is what you do when you're running or walking and it's a steady pace. This works out your body well in that maintaining this intensity helps you burn calories and lose weight. You can maintain this intensity for a long period. This is the intensity you'd run a 10k or half marathon at.
Anaerobic exercise increases muscles mass. This is what weight lifting and brief high intensity training does. This helps you in many ways. It increases the amount of calories burned when not exercising because you're body needs energy to build up the muscle you used. It's good to get this type of workout in once or twice a week.
The incline helps you get anaerobic exercise and this uses more of some muscles than others. The incline set at 10% gives you a tough workout and is certainly not one you could do for a long period. Walking uphill which is what the incline does means you use more of your butt muscles, your quadriceps and calves.
Walking and running on an incline or not works out your muscles pretty well. Sprinting uses the core and the arms as well, note that sprinting on a treadmill is not the easier thing to do and only recommended for experienced treadmill users. If you're looking to get in shape then running on a treadmill is ideal, it will make you lose weight like no other exercise.
If you're looking to gain muscle then you're better off lifting weights with your legs to sculpt the lower body. If you're looking to tone your lower body and lose the weight around the frame then walking and running will do it. Nothing works the lower body muscles like a treadmill. So walk and run freely and enjoy it because it holds many benefits.