Yes, it’s versioning of the Zwave standard itself. (The command sets.)
With new versions, new features are introduced. It’s always intended that the newest version is the best, but there’s sometimes room for argument.
Because Zwave is a proprietary standard, you can’t publish exact specifications on the OpenNet. You’re supposed to pay for the developers license to get access to all the documentation. So SmartThings is likely limited in how much detail they can put in their own documentation other than referencing the commandset names.
FYI, Z-Wave devices support either V1 or V2. You have to query the device to find out which version it supports and use that exact version. Some commands are backward-compatible, but if you send V2 commands to a device that only supports V1, it will most likely fail.