Versions are the revisions of the product, such as "Flinders 3.1", "Flinders 95", and "Flinders 2000". Version is not a multi-select field; the usual practice is to select the earliest version known to have the bug.
To create and edit Versions:
From the "Edit product" screen, select "Edit Versions"
You will notice that the product already has the default version "undefined". Click the "Add" link in the bottom right.
Enter the name of the Version. This field takes text only. Then click the "Add" button.