Normally you know which version of a given distro you are running if you are on your machine, but what if you are on a rented server, or a friend's machine.
If you want to know which version of Debian or Ubuntu you are running, you can always check the /etc/apt/sources.list there you will see the version you are running but a better way is to run this on a terminal:
Anybody who spends time trying new free software applications and distributions will soon notice that version numbering and labeling is next to meaningless. These days, versioning rarely gives an accurate idea of the state of development, except relative to other builds of the same project. It is simply a label that distinguishes one build from another. That's too bad, because a properly labeled release can give users a sense of how advanced the build actually is.