Very few documents or spreadsheets are ever started, drafted, reviewed and completed by one person in one sitting. More often there will be several people involved in the process and it will occur over an extended period of time. Without proper controls this can quickly lead to confusion as to which version is the most recent.
Consider the drafting of a final report by a project team. The project manager will write the first draft. They then wish to seek the input from the five other members of the team. They will often email the draft report as an attachment to the members of the team, each of whom now set about reviewing the report and adding their comments before sending it back to the author. There are now six versions of the draft report. Once all the comments in all the copies have been reviewed and implemented another version is created and perhaps re-sent for another round of review. We now have over a dozen different versions of the report in circulation and a recipe for chaos.
The inability to quickly and easily identify the latest version of a piece of information can lead to an array of problems. Most serious of which is the risk of decisions being made according to out of date information which is believed to be current. Financial calculations based on inaccurate figures in a superseded spreadsheet are a particular risk. It can also lead to potential embarrassment with information which was removed from a previous draft of a report being mistakenly included within the final version.
Finally of course it leads to wasted time and considerable frustration both on the part of the author who spends time needlessly working on an old version and the reader who has read an obsolete document.
