*snip*Version numbers are completely arbitrary. You can give your product any version number you want. You don't necessarily have to start at 1 (the first version of Windows NT was 3.1) and you can skip numbers if you want (Windows recently went from 6.something to 10).
That said, there has always been a sort of "gentleman's agreement" in the software world. Version 4.0 represents significant changes over version 3.0, while version 4.1 only represents a minor change from version 4.0, and version 4.1.1 represents an even smaller change.
This pattern of version numbering is not only logical and sensible, it communicates important information to users, especially businesses who may be affected by big changes in a piece of software.
What I find interesting is that a few years ago, around the time of Linux 2.6.something, there was a post on a mailing list that Linux Torvalds frequents and he said very emphatically that there would NEVER EVER be a Linux 3.0. I don't remember the reason, but I thought it it was a very weird thing to say.
But now it seems that he has jumped on the Google/Mozilla bandwagon of "Let's increment the major version number even though we haven't made any major changes that would warrant such a change."
"Significant changes" is pretty subjective though. Especially in the kernel, sometimes some feature comes into Linux that is extremely significant for users of a specific hardware platform, but meaningless for me.
Linux's development model has been basically release a new version of Linux every 8-10 weeks. That's as major as a release gets. Kernel features are actually developed asynchronously, it's possible that a feature is developed for years before it is eventually merged into a mainline window (which is typically only the first week of the release cycle). Git was actually designed for the explicit purpose of accommodating this kind of development model.
What we see is that Chrome and Firefox has been emulating Linux's release model of "rapid releases" lately. As such, I think Linux should be <release number>.<patch level> also. Maybe the next version of Linux will indeed be Linux 5.