I don't understand what does codemagic team mean on this screenshot. Why should I add 100 to build number? Or this is just an example? And when should I update 1.0.0 to 1.0.1 or 1.1.0 to 1.2.0?
It's just an example demonstration how to add greater numbers. Often necessary when you have already built many times locally and are switching to automatic - otherwise your publishing will fail. If you do not have any releases yet, then just using $BUILD_NUMBER is sufficient.
I think updating the build version is up to the developer though - and there are no strict rules how to do it - just move upwards with it.
https://rollout.io/blog/best-practices-when-versioning-a-release/