Apple's doc could have been more clear on how to submit an update version.
As asked in the title, What's the difference between
Are they related in any way?
Yep, they all are related.
Version Number in itunesconnect is the version number you need to supply. For example, 2.1.1 or 3.1.2 etc. This also should be equal to the CFBundleShortVersionString.
Bundle Version In Xcode (CFBundleVersion) represents just the Build number which identifies an iteration (released or unreleased) of the application.
Bundle versions string, short (CFBundleShortVersionString) is a number comprising of three integers separated by dots. First one represents any major updates of the application, such as updates that implement new features or major changes. The second integer denotes revisions that implement less prominent features. The third integer represents maintenance releases.