The story is a few sentences long and it has survived because it names a mechanism people recognise but rarely have a word for.

The tale

On a cold night a camel asks its master if it may put just its nose inside the tent. The master agrees; it is only a nose. Then the neck, since the nose is already in. Then the forelegs. Each request is small and each is reasonable given the last one. By morning the camel fills the tent and the man is standing outside in the cold, having never once been asked for anything unreasonable.

Why it is a good story rather than a good rule

Stated as a principle — "reject small concessions because they lead to large ones" — it is wrong, since most small concessions lead nowhere and refusing them all makes you impossible to work with. What the story actually captures is subtler: the danger is not the size of the request but that each one is judged against the previous position rather than the original one.

That is a real cognitive trap and it has a name in negotiation literature. The folk version got there first and is easier to remember, which is why it has lasted about a thousand years longer.