The version key purpose is optimistic locking.
When enabled, the version value is atomically incremented whenever a document is updated.
This allow your application code to test if changes have been made between a fetch (bringing in version key 42 for example) and a consequent update (ensuring version value still is 42).
If version key has a different value (eg. 43 because an update has been made to the document), your application code can handle the concurrent modification.
The very same concept is often used in relational databases instead of pessimistic locking that can bring horrible performance. All decent ORMs provide such a feature. For example it's nicely described in ObjectDB documentation. It's an object database implemented in Java but the same concept applies.
The blog post linked in Behlül's comment demonstrate the optimistic locking usefulness with a concrete example, but only for arrays changes, see below.
On the opposite, here is a simple case where its useless: a user profile that can be edited by its owner ownly. Here you can get rid of optimistic locking and assume that the last edit always wins.
So, only you know if your application need optimistic locking or not. Use case by use case.
The Mongoose situation is somewhat special.
Optimistic locking is enabled only for arrays because the internal storage format uses positional index. This is the issue described by the blog post linked in the question's comment. I found the explanation given in the mongoose-orm
mailing list pretty clear: if you need optimistic locking for other fields, you need to handle it yourself.
Here is a gist showing how to implement a retry strategy for an add
operation. Again, how you want to handle it depends on your use cases but it should be enough to get you started.
I hope this clears things up.
Cheers