Everyone chooses what they want to do with these numbers. I've been tempted to call releases a.b.c since it's rather silly anyway. That being said, what I've seen over the last 25+ years of development tends to work this way. Let's say your version number is 1.2.3.
The "1" indicates a "major" revision. Usually this is an initial release, a large feature set change or a rewrite of significant portions of the code. Once the feature set is determined and at least partially implemented you go to the next number.
The "2" indicates a release within a series. Often we use this position to get caught up on features that didn't make it in the last major release. This position (2) almost always indicates a feature add, usually with bug fixes.
The "3" in most shops indicates a patch release/bug fix. Almost never, at least on the commercial side, does this indicate a significant feature add. If features show up in position 3 then it's probably because someone checked something in before we knew we had to do a bug fix release.
Beyond the "3" position? I have no clue why people do that sort of thing, it just gets more confusing.
Notably some of the OSS out there throws all this out of wack. For example, Trac version 10 is actually 0.10.X.X. I think a lot of folks in the OSS world either lack confidence or just don't want to announce that they have a major release done.