Versions is a new feature Apple placed in Lion to allow almost any application the ability to version documents that users are working on. This means that when you save a document as you're writing, you will not only have access to the current version, but you will also have access to the previous saved versions of the same document.
Despite Apple showing off the feature, and placing documentation on their website, many questions remain unanswered: Where are the versions saved? How much space do the versions take up? Can you manually access the versions? Well, here's everything you need to know about Versions.