with each version of directX, they add more features to be handled directly by the hardware and with functions supported in it.
Say in directX 5, they added lighting, so all you have to do is call the "addlight" function, tell it where and how bright and the color and the hardware would calculate that. If that wasn't in directx 4, then the game maker would have to actually code the whole process for lighting, how it affect every 3D surface, etc and it may be handled by the CPU instead of directly on the GPU.
With each version, they add new things like smoke, reflections, shadows, etc. It puts more processing onto the GPU and directy built into functions instead of reinventing the wheel.