Cartilage certainly does heal, but there are several buts. It is a massive tissue in comparison to the rate at which it is served by your bodily fluids, and this limits the rate at which tissue can be added. In particular positions, such as lining the socket of a joint, it's texture and structure are both complex and crucial; not just any bit of cartilage is acceptable just anywhere, particularly not when it is to be stressed every time you move or sneeze.
A particular feature of its structure is that very strong fibres, largely of collagen, penetrate all the way through and in particular orientations. If you break the cartilage, you will break some of the fibres, and they cannot be joined, not much anyway; which means that the strength of the collagen across the break will never be the same until the fibres are replaced, which is not always a simple matter.
Then again, unlike say muscle or skin, cartilage has so little give that new cells cannot grow as easily inside the mass as in softer tissues.
Trying to mend cartilage across a break is very difficult because, not only is there the problem of bridging the break with new fibres and new cells, but if there is any tendency for stress across the break, you are not likely to get much proper structure forming.
As for a hole in cartilage, if it has been present for a long time, or there has been a lot of tissue damage, either from infection or metal poisoning from pins and the like, it is quite possible that the tissue will have retreated to a stable position, and will not grow over again.
So, in summary, yes the body can heal harmed cartilage to a great extent, subject to the nature of the damage, the nature of the cartilage, and the circumstances under which the healing is to occur.
It will be interesting to see how long it takes the cartilage in your ear to heal over completely, but there is no reason it should not, given that cartilage in your ear is neither very thick, nor very dense, nor subject to continual stresses like those in your knee.
