In GNU Coreutils, the name version sort was chosen because it is based on Debian GNU/Linux’s algorithm of sorting packages’ versions.
Its goal is to answer questions like “Which package is newer, firefox-60.7.2 or firefox-60.12.3?”
In Coreutils this algorithm was slightly modified to work on more general input such as textual strings and file names (see Differences from Debian version sort).
In other contexts, such as other programs and other programming languages, a similar sorting functionality is called natural sort.