Versions are the separate statuses of the assets. When a changing occurs to an asset or the related file it counts that as a version.
-Number of previous versions of an Asset to keep : Specify how many versions of one asset to be kept in the database.
-Default Change Source File Option : There are three options about saving old file as a new version or not.
+ Ask the user - is let the user decide while changing source.
+ Save as file verison - automatically saves all old source files as a version.
+ Do not save as file version - never saves old files as versions.
Please see Versioning for detailed information.