Lion - automatic file versioning - details
The only information has released to non-Mac Developer Program members is the following.


  If you have a document-based application, Lion offers an efficient, built-in auto save feature that stores changes to the working document instead of creating additional copies on a disk. Versions automatically records a history of changes made to your documents and lets your app display a Time Machine like interface so users can browse through previous versions. ADC


There is more information available for Mac Developer Program subscribers. The information, however, is currently restricted by a non-disclosure agreement . The information will most likely be made available for everyone once the final version of Lion is released. This is how Apple have done it in the past.

Personally I am a bit disappointed that Apple chose to go with ‘something else’ instead of the native handling of this offered by the ZFS file system. (As rumored as far back as Leopard.)