I found this confusing/misleading as well. After releasing an action yesterday and tagging the first version as 1.0.0 , I was expecting to be able to use v1 to point to my 1.0.0 version, but was instead getting errors that the action could not be found.
I had read here that in order to use an action, you just need to specify the major version to recieve critical updates and I thought this meant it happens automatically. However I was wrong.
According to this page, what they expect of the action author is that each time a minor version is released, he/she should change the tag corresponding to the major version of that release to point to the new tag, which means that the users of the action will not need to follow minor/patch releases to stay up-to-date.
Move the major version tag (v1, v2, etc.) to point to the Git ref of the current release. For more information, see “Git basics - tagging.”
To automate this, I created the actions-tagger action which does the versioning automatically.