Each software product is usually associated with some sort of "version" number. This is a set of three or four numbers separated by dots, e.g. "1.5.0". Software development groups use these numbers to uniquely identify a particular version of the software that was released. How these numbers are to be interpreted and how significant they are depends on each software company or organization.
Generally, the first number indicates the major revision number. The second number is a minor revision number. The third digit is a sub-version number. If a fourth number is shown, than that usually means the "build" number. The build number is the next sequential number of when the application's source code was processed (compiled) into an executable format. Few companies use this number publicly, because it really only has any significance to the internal development team. Microsoft is a notable exception.
All software products are released as version 1, or "1.0.0.". Some people, especially open source type groups, will release an alpha or beta release (a "test" version) before the official initial release for limited distribution, and those will start off with the number zero, e.g. "0.8.3". Microsoft calls test releases "release candidates", or "RCs".
At Fourth Ray Software we only use the first three numbers. The major revision number is just that; whenever a major change has taken place within the application (such as a significant change to the main user interface, and/or a thorough redesign of the behind-the-scene data storage), we change the major version number to the next sequential number. The second number indicates a change in the user interface (menu or pop-up windows) or some new feature that was added to the application, but one that wasn't significant enough to warrant a major revision number change. The last number is a sub-version number. This we change whenever we have only fixed one or more problems found in the application, and those problems are "under the hood" and may have no impact on the overall user interface. So, to sum up, the first number indicates a major user interface change, the second number indicates some minor user interface changes, and a change in the third number indicates a bug fix or no user interface change.