Versioning is the process of assigning unique identifiers to different states or iterations of a product, software, or document. This helps track changes over time, making it easier to manage updates and improvements. For example, when a software application like Microsoft Word is updated, it may go from version 1.0 to 2.0, indicating significant changes or new features. In collaborative environments, versioning is crucial for maintaining organization. It allows multiple users to work on the same project without overwriting each other's contributions. Tools like Git help developers manage code versions, ensuring that everyone can access the latest updates while preserving previous versions for reference.