the "back in the day" nomenclature system made total sense up until 1986.
If X is the variable number:
X00 is the tubing.
0X0 is the type of frame (geometry type)
00X is the component level.
Go to the 1978.5 Trek catalog:
http://www.vintage-trek.com/images/trek/Trek2.pdf
The left column is the model number- They're grouped by component level so the components are all in a line.
5xx is Ishiwata 022
7xx is Reynolds 531
9xx is Columbus SL/SP
x1x is a sport touring frame
x3x is a racing geometry
For components, it looks like:
xx2 is Suntour VXGT and VX components with Weinmann brakes
xx4 is Suntour VXGT and VX components with DiaCompe brakes
xx6 is Shimano 600 Arabesque
xx7 is Campagnolo GS
xx8 is Campagnolo NR
Around 1982 they tweaked the model (geometry) line a bit.
Very generally:
x0x, x1x was sport touring
x2x dedicated touring
x3x racing
There were other specialized racing frames like the 170 and the 959... but those were VERY specialized bikes that were above naming convention standards.
Generally speaking until 1986:
200, 300 and 400 series frames are going to be either hi-ten, hi-ten mixed with CrMo or manganese alloy.
500 series frames are going to be CrMo- either Ishiwata 022 or Reynolds 501
600 series frames are going to be 531 main tubes and the stays and fork are CrMo or Mangalloy.
700 series frames are going to be 531 frame, fork and stays.
900 series frames are going to be Columbus frame, fork and stays.
Around 1984 they introduced 800 series bikes as ATB/MTBs
You'll see 600 series bikes that say the "frame fork and stays" are made of 531CS. 531CS means 531 main triangle and CrMo fork and stays: "REYNOLDS 531 CLUB SPORT transfer, a cycle bearing this transfer has top seat and down tube BUTTED in REYNOLDS 531 and head tube, BUTTED steerer. TAPER GAUGE forks, seatstays and chainstays manufactured from specially cold worked chrome Molybdenum tubing. Designed for fast sports and touring."
In 1986 they started using 531 in 400 and 500 series bikes, and then in the early 90s they started reusing numbers that had been assigned to high level road bikes and assigning them to hybrid and MTBs. I don't know a whole lot about the nomenclature system then, but I assume the higher the number the nicer the bike...