Generally version can apply to any variety of something. With high tech products that undergo rapid improvement, it tend to refer to a sequential progression (Windows 8 being a later, more modern, version of Windows than Windows XP). They often have a numerical indication of their place in this sequence, but recently many marketing departments have favoured separating the brand under which something is sold from the numbering system used in developing it (this has resulted in the ironic situation where "Windows 7" is the brand name of what is internally "Windows 6.1" and "Windows 8" the brand name for "Windows 6.2).
Because version has this specific meaning in terms of high tech products, it can be confusing if you try to use version in the more general sense. For that reason flavour was first used as a slang word for this sense, metaphorically comparing to foods like ice-cream and confectionery which come in a variety of different flavours.
It's quite deliberately not strongly defined. For example, it might not just cover different distributions of Linux (distros as a common slang contraction), but even different options for the same version of the same distribution might be called a flavour.