You have two changing variables: t and tau. And you are calculating N using changes in tau, but plotting over changes in t.
If you want both t and tau to be changing, then your code needs to use a plot with two independent variables and one dependent variable, such as a surf() -- and your formula needs to include t, even if only implicitly. For example if you were to rewrite N0 to be something that depends on time:
num_t = 11;
num_tau = 12;
t = linspace(0, 10, num_t);
N0 = t ./ 10; %signal is straight line
tau = linspace(0.5, 10, num_tau);
N = N0 .* exp(-1./tau.'); %tau is vertical, time is horizontal
surf(t, tau, N, 'edgecolor', 'none');
xlabel('time'); ylabel('tau'); zlabel('N')
