Y: This increases every year the team is working on the product
MM: The month in which the build was compiled
DD: The day on which the build was compiled
NN: Number of recompiles of the build (during the development this number is mostly 00 or 01, but when a build gets branched for release, the other parts of the build number are freezed and only this part increments)

This build number format is not only used for Visual Studio and .NET, but also for many other products like Commerce Server 2009, Codename Geneva or Microsoft Silverlight.

Here are a few examples:

8.0.40607.16 – VS 2005 Beta 1 – 2004*, 7th June, recompile no. 16
8.0.50215.44 – VS 2005 Beta 2 – 2005, 15 February, recompile no. 44
8.0.50727.26 – VS 2005 RC – 2005, 27th July, recompile no. 26
8.0.50727.42 – VS 2005 RTM

9.0.20404.00 – VS 2008 Beta 1
9.0.20706.01 – VS 2008 Beta 2
9.0.21022.08 – VS 2008 RTM

10.0.11001.01 – VS 2010 CTP
10.0.20506.01 – VS 2010 Beta 1

*Orginally the Y was the last character of the calendar year, but with the beginning of the development of Visual Studio 2008 it has been changed to the number of the year the team is working on the project.