In software, you need to track versions because you keep everything in multiple files, and you're making changes to multiple files, and you can have regressions with each new version.

In a negotiated legal document, you have just the one authoritative version: the offer you've sent to the other party (or the counter-offer they've sent back to you). For lawyers, this takes the form of edits to the document as highlighted by the Track Changes feature. (Prior versions are basically irrelevant except for historical interest.) And even then, the document going back and forth isn't even the executed (aka "production") document, it's just the development version. Once the document is executed, the development versions get deleted because the executed document is the only truth legally and so prior versions absolutely do not matter.

No, you literally can't. They're separate files. A legal agreement is just one document. It makes a world of difference for version tracking.

Also, software has versions. If you have an issue, you can just rollback to a working version. Legal agreements don't have multiple working versions. They just have the one, and you don't get to update it, because if you change it, you have a different agreement that supersedes all old copies, which are now longer worth the paper they're printed or or the bytes that store them.

Sure, you could have needlessly more complicated version tracking for legal documents. But Track Changes in Word works fine, because the legal field doesn't need anything more complicated.

In the same way, i can literally think of my legal documents as a single document (say, a visa application) with multiple files (say, a petition, a copy of my wedding certificate and a reference from a friend). [Ironically, this language is precisely the reverse of what you would say with the printed copies.]

When they're printed out you can't tell what the boundaries are. Don't get confused by the implementation and the abstract concepts. If there's a distinction that doesn't work well, you can change it. Maybe version 2035 of Word stores every paragraph in a separate file inside a zip archive. There's no reason Generic Version Control System 2038 couldn't be written to peak inside those archives.

Ideally, settled issues should remain settled as remaining outstanding issues are resolved during the deal-making process.

But, this is a western tradition/convention, Asian deal-makers seem to be more than happy to look back and re-open settled issues, driving American lawyers insane.

Something like this already exists in multiple forms because it is very useful. It's so useful that the owners of those sites can charge lawyers a lot of money for access... Hundreds of $ per month.

That's not true. Many a times I needed to comb through old commits for debugging purposes.

Also, with multi-branch development, you often have many non-release branches that are relevant at a specific point in time.