setBrightness() was intended to be called once, in setup(), to limit the current/brightness of the LEDs throughout the life of the sketch. It is not intended as an animation effect itself! The operation of this function is “lossy” — it modifies the current pixel data in RAM, not in the show() call — in order to meet NeoPixels’ strict timing requirements. Certain animation effects are better served by leaving the brightness setting alone, modulating pixel brightness in your own sketch logic and redrawing the full strip with setPixel().
Directly from the docs...