Each time you open a document, OSX Lion automatically saves the current version. It also saves a new version every hour while you work, building a history of the document as you go.
You can manually create a version of your saved document at any time by choosing File>Save a Version or press Command-S.
OS X Lion saves only the information that has changed since the last version, making efficient use of space on your hard drive. OS X Lion manages the version history of a document, keeping hourly versions for a day, daily versions for a month, and weekly versions for all previous months.
When you share a document (for example through email, iChat, or AirDrop) only the current version is sent; all other versions remain on your Mac.
Elements of the Versions browser
1. Current version- The current version of your document.
2. History- A cascade of past versions for your document. Tip: You can copy and paste elements of past version, like graphics and text, into your current version.
3. Restore button- Click it to restore, replacing your current document with the version at the forefront of your history (item 2).
4. Timeline- The timeline of past versions of your document. Click a date to see how your document looked on any given day.