Most follow the three F's: Form, Fit, Function. If any of the three change such that the new version can not be used in place of the previous version, then a new part has been created necessitating a new part number.
I agree with Jeff.
"Must all revisions be backward compatible with their previous revision?"
It's a good question. I see engineers all the time not following any kind of revision schemes at all.
Jeff and Chris,
Thank you for the very quick reply guys,