The different versions actually occur in two different ways and for different reasons. The biggest reason most students might want a different version is if they find out that they made a mistake on the common application but have already sent it off to at least one college.
Made a mistake in your phone number? Your school code? Just realized that you were supposed to list your activities in order of importance? All of these items can be easily corrected and once you have done so, the new version will be sent to each college that gets your common app. These type of corrections have no limit to them.
But what if you have an error in your common app personal statement? You can still correct this essay but the number of changes is limited. You can only have 3 versions of the application where the essays are different. Once you have reached the limit of 3 essays, the final essay will be frozen.
The second possible reason for another version of your common app is if you want to personalize it for a specific college. Let me say here that this is neither wise nor advisable. There is absolutely no reason to personalize the common app for different colleges. But every year, I have at least one student ask about doing this.
Typically the college specific version of the common app has a different essay than is being used for the rest of the colleges the student is applying to. Some students believe that it is necessary to use an essay that will highlight some aspect of the student that is only applicable for that one college.
Frankly, I have never seen a situation where this is required. But if you believe that you need to have a different essay for one college, it is possible.
This comes under the category of just because you can do it, doesn’t mean you should do it.