Where is this JQuery coming from?

I understand that this loads JQuery throughout my website – but here’s
the odd thing, if I change the version of JQuery is does NOT update.

It’s not odd. You can’t load arbitrary versions of jQuery by changing the version argument. From the documentation for wp_enqueue_script(), that version number is:

String specifying script version number, if it has one, which is added
to the URL as a query string for cache busting purposes. If version is
set to false, a version number is automatically added equal to current
installed WordPress version. If set to null, no version is added.

So it’s just for telling WordPress which version number to append to the URL. If you’re loading an already registered script it’s only going to load the version bundled with WordPress (currently 1.12.4).

But your issue has nothing to do with the version of jQuery being loaded. The issue is that WordPress runs jQuery in ‘no conflict’ mode. This just means that jQuery is not assigned to $. Instead you need to access it with jQuery. So if you’re running jQuery code in WordPress you either need to replace all your uses of $ with jQuery, or wrap your code in this:

(function($) {
// Your code here
})(jQuery)

This will make jQuery available as $ for your code.