Versions are older copies of files. Typical files that have older copies/versions are Word documents, pictures, spreadsheets, etc.
Let's say you have a picture that was backed up to ElephantDrive and you decided to make some edits on that picture (i.e. cropping, changed contrast, etc). Once you save the edits, ElephantDrive will upload the new file with the edits as the most current file; but it will also keep the older copy of this file as a version in your ElephantDrive account.
How many versions are kept and for how long they are kept for can be changed by changing the versioning rules. To learn how to change the 'versioning rules', click HERE. Or, click here to watch a quick animation on how to modify your Versioning Rules.