Doesn't Drive, just like Dropbox, simply version everything similar to a source control system?

Using the optimistic locking pattern, this would mean that Alice could undo, and if Bob then makes changes referring to Alice's entry, it'd be pointing to a previous versioned entry (Alice's undo would simply copy version n-2 and make it version n while Bob would be pointing or editing version n-1)

Not sure. That behaviour would be a little weird, if Alice hitting Ctrl-Z undoes what Bob just did. Google Drive's document editors explicitly appear to support "undo".