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I am not sure how does sharepoint online managed the versions for the documents inside document libraries? For example let say that i have a document with 50 pages and the document is on version 1, and i edit the document where i change a font color for a single word, and i save back the document, where the document version get updated from 1 to 2. then will sharepoint stores 2 full versions of the document? or it will only store the differences in the second version?

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    Are you asking out of curiosity about how things work in the back end, or about storage quotas and billing? – Mike Smith - MCT - MVP Nov 14 '18 at 0:33
  • @MikeSmith-MCT-MVP i am asking out of curiosity and many customers ask us the same question... – SharePoint TestDev Nov 14 '18 at 2:07
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A web search for "SharePoint version shredding" will get you a lot of info. How Microsoft stores data on the back end of SharePoint online is not visible, or configurable, to us. I would assume that Office document shredding works like it does on-prem.

As far as size reporting, all versions report the full size of the document, regardless of how it is stored/shredded in the database.

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