AWS Documentation https://docs.aws.amazon.com/lambda/latest/dg/lambda-runtimes.html#w349aac23c27 here
mentions aws sdk under supported runtimes for nodejs18.x to be v3.362.0, is this minimum supported version or recommended stable version to be used?
I see the client v3 is already on v3.456.0, Its not clear from the aws documentation whether the mentioned version is recommended or minimum supported version by node runtimes.
I'm sure latest version works in lambda runtime but would like to know what documentation is trying to convey
It is neither of those things. The AWS SDK version listed on the page you linked is the version that is provided in the Lambda runtime for you. You don't have to package the AWS SDK in your Lambda deployment file if that version is OK for you.
If you require a different version of the AWS SDK in your Lambda function, then you have to include it in your Lambda deployment package.