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8 = eighth version of iOS.
4 = fourth major update of iOS 8.
1 = first minor update of the fourth major update of iOS 8.
Sometimes can even be seen as the following:
8 = 8th major version of iOS
4 = 4th minor update to iOS 8
1 = 1st bug fix or trivial update to iOS 8.4
 
Sometimes can even be seen as the following:
8 = 8th major version of iOS
4 = 4th minor update to iOS 8
1 = 1st bug fix or trivial update to iOS 8.4

I still see it the way I described it. (I know some may see it how you wrote it)

To me the 8 is the version number of what iOS it is. (Which is obvious, because it changes with each new release every fall)

The 4 is the major updates that bring further features to that version of iOS. (8.1 brought Apple Pay and iCloud Photo Library beta, Continuity (handoff, hotspot and SMS relay.) 8.2 brought Apple Watch app and support. 8.3 brought the new-ish keyboard and new emojis (not quite a major but new feature nontheless) and finally 8.4 brought new Music app and Apple Music.

The 1 I agree being mostly bug fixes. (The 4 (aka middle number, aka major updates also include bug fixes along side the new features.))
 
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