Undo is linear. Cmd+Z, Cmd+Z, Cmd+Z, until the thing you wanted back appears. Two minutes of work, recoverable. Two days of work, not.
Version history is a tree. Every save is a checkpoint. Every checkpoint is keyed by time, not keystroke count. The paragraph you cut on Tuesday is still there, in the version saved at 3:14 pm before you cut it. Scroll back, click Restore, the document rewinds to that version. The current version becomes another branch in the history. Nothing is destroyed.
The difference matters because writing is not a linear process. You add, you cut, you cut more, you regret the cut. Undo only goes back as far as the session that’s still in memory. Close the tab and the undo stack disappears. Version history doesn’t care if you closed the tab a year ago.
Every save, every version, kept on every plan. It’s not a Pro feature because it’s not really a feature. It’s how the storage works.