How does Sitecore handle versioning of items?

Sitecore manages the versioning of items by creating multiple versions for content editing. Each time a change is made to an item, a new version is created, allowing for a history of changes to be maintained. This means that editors can easily access and revert to previous versions if needed, promoting a collaborative environment where multiple users can work on the same item without losing historical data.

The versioning system enables organizations to manage content in a more structured manner, ensuring that modifications can be tracked and audited. It supports a workflow that includes content approvals and rollbacks, making it an essential feature for effective content management.

The other options do not accurately represent how Sitecore handles versioning. For example, deleting older versions to save space would contradict the purpose of maintaining a version history, while converting items into static files and automatically updating items with new content would not support the editing and review processes integral to content management in Sitecore.