Just as Apple does with iOS, Google continually updates Android with cool new features, leading to one "point" upgrade after another.
The most recent version of Android is 2.2, code-named "Froyo" (for frozen yogurt, yum), adds features such as native USB tethering (for sharing your Android phone’s data connection with a laptop via a USB cable), mobile hotspot functionality (which turns your phone into a portable Wi-Fi hotspot that works with nearby Wi-Fidevices) and — perhaps most important — support for Flash, meaning that Flash-powered videos and modules that (notoriously) don’t work on the iPhone will work on the Android Web browser.
Before 2.2 Froyo, we had version 2.1, which added "live" animated wallpaper, new home screen icons and widgets (tiny apps for the home screen), speech-to-text functionality (for e-mail and text messages, for example), full-on multitouch (for pinch-to-zoom gestures), and an updated photo gallery that hooks into your Picasa Web albums. Android 1.6 "Donut" (someone at Google must have a sweet tooth) added various speed improvements, support for more screen resolutions, and faster camera and camcorder applications. The first major update to Android was 1.5 "Cupcake," which (among other goodies) finally added a native video recorder.