Many android smartphone owners probably don't even check or know the version of android operating system(OS) powering their device. An operating system is the main software that controls the interaction between a device's hardware(keyboard, camera, CPU etc) and the other apps and programs running on the device. New versions of Android OS are released by Google every one to two years. But majority of android phone owners don't receive the latest version for months or years. Many don't receive it at all. Hence the update cycle of the android operating system is fragmented.
Here is the approximate usage distribution of various android versions
WHY?
Unlike windows 10 OS update process which microsoft has more control over, the android OS update process is controlled largely by the device manufacturers and phone networks. The android software is an open source project meaning that device manufacturers can "fork"(i.e. modify) the base software and add their own unique features. Hence the stock android software version that google releases is not what ends up on many devices.
Google releases new version of android OS, then it's up to device manufacturers(and mobile phone networks) to push their versions of the update to the final destination: our smartphones and tablets. The upgrade cycle varies in various markets and with mobile phone networks, hence many devices don't get the latest version.
SO?
Running the latest version of android OS improves the performance, stability and most importantly the security of your device. Also new features sometimes come with the latest versions.
There is no easy solution to this android OS fragmentation because of the cut throat competition among android device manufacturers and the need to differentiate from the rest. Also many developers can't be bordered to update their apps on the Google Play store to take advantage of new features in latest android versions released by Google.
Google intends to robustly enforce its new API level policy. API level is merely the framework reference to the Android OS version release and the software development kit(SDK). For example Android 7.1 is API level 25. Google intends to require apps to target API level 26( Android 8.0) or higher. Hence developers will be required to update their apps on the Play store.
Google also tried with the Android One project to get android stock OS to cheaper devices. But it's not clear that OEMs are interested in wasting resources on such low end devices. Google may have better luck with its Pixel smartphones. But not many people buy the device.
Google may have to build and distribute mass market cheap Pixel-type devices. But that would be costly even for Google. And OEMs won't be happy.