How versions are compared?

Is there standard method/custom for marking alpha and beta versions?

It uses Apple's standard versions, which is three points. The nice way to implement beta versions is 1.2.1 vs 1.2.2 vs 1.2.3, with display version strings like "1.2b1", "1.2b2", "1.2b3", but if you use "1.2b1" it will probably work.

Often zeros are equivalent to nothing, but that's not guaranteed. You just never should count on it, so never use it (that is, don't use both). As for alphabetic characters, they're not allowed in CFBundleVersion (which is what's used for comparisons), so results are simply undefined (this is documented by Apple, though with some documentation bugs). Apple's docs clearly state that CFBundleVersion can only contain digits and periods, and for those the ordering should be obvious.

The preferred way actually is to use a separate CFBundleVersion that monotonically increases (often simply an integer, as in Apple Generic Versioning) and a human readable CFBundleShortVersionString that can be anything (IMHO here the docs are wrong, bug filed), including strings containing "a" or "b". The former is used for (unambiguous) comparisons, the latter for display (I'm pretty sure about that).