npm relies on Semantic Versioning (SemVer) for versioning packages, with format MAJOR.MINOR.PATCH.
Version numbers like ^1.2.3 or ~1.2.3 in package.json files define which versions of a package can be installed automatically.
Best practices for npm package versioning include adhering to SemVer, updating versions with npm version command, maintaining a changelog, and resolving version conflicts.
Clear communication of changes and maintaining trust with users is essential in npm versioning to ensure reliability and predictability of packages.