In the Dynamics consulting world, we have used various terms to explain product upgrades to our customers like Update Rollup, Service Packs, Service Pack Updates and now Update 1 and hence forth. At times, it becomes difficult to explain when customers ask the difference. Dynamics CRM team recently published most up to date explanation on the CRM updates:

Source: http://blogs.msdn.com/b/crm/archive/2015/04/14/new-naming-conventions-for-microsoft-dynamics-crm-updates.aspx

I am taking the main points from the text:

Understanding the version:

The first three numbers of the 7-digit version number tell you most everything you need to know about your update.

Product names, versions, releases, and code names

The following table shows CRM Online product names with their associated version numbers and code names.

The following table shows CRM (on-premises) product names with their associated version numbers and code names.

The source table has more details to read. Thanks to awesome Dynamics team at Microsoft to put this together.

This will definitely help in answering customer queries on versions.

Hope it helps!