Delete Previous Versions with Document Sets

Hi. 

I am building a workflow for document sets.  My question is, How does "Delete previous versions" work with them?  

If, at the end of my workflow, I added the "Delete Previous Versions" step, would that remove all versions of all documents inside of my document set, or only all versions of my document set itself?  Or, are those one in the same?  (ie: when a version is made of a document, does that make my document set, version 2)? 

Sorry for the foggy question.  Let me know if I can provide more information. 

Thanks!