It does follow version numbers. The leading number is the generation designation for the most part, and in some cases a prefix denotes a series. So the Radeon HD series started at 2000, where the Radeon series started at 7000. Radeon HD is a later series of products, denoted by the HD after Radeon. Furthermore, nVidia and ATi/AMD have always had different number conventions at any given time, so while the GeForce FX 5200 was new the corresponding ATi product was the Radeon 9200. So despite the Radeon HD 4350 PCI actually having a lower number, the way to read it is Radeon HD (Product series) 4 (generation of series) 350 (market/performance position) which points to it being a newer product than the GeForce FX 5200 PCI.
As for the reason numbers bounce around, it's because a series can be run to the furthest extent of the numerical system and need to be refreshed. For example when nVidia ran up to GeForce 9800 GTX, rather than release a 10800 they reconfigured their naming system entirely by swapping the suffix (GTX) to be a prefix to the numeral, and restarted from a lower number leading to the official market successor of the 9800 GTX being the GTX 280.
Also note, the GPU fan speed is static at 31% - Doesn't move and the GPU temp never got above 67c. This is with a fresh application of TIM.
