What is VM Hardware Version?

Definition of VM Hardware Version:

VM Hardware Version refers to the designate the virtual functions that a particular virtual machine can support.

Explanation:

VM Hardware Versions are basically used to demonstrate that which virtual hardware is capable of supporting which virtual functionalities in a virtual environment. The versioning system follows a specific schema. The later versions are always capable of supporting more virtual functionalities then their prior versions. That is why user always prefer latest versions because using older versions may result in lesser functionality.