On the ATtiny85 webpage
is the list of different ATtiny under "Ordering Codes".
[ATTINY85-20MU, ATTINY85-20MUR, ATTINY85-20PU,...........]
The difference between them is listed under 'speed' and 'package' columns of that table. What is that speed or package means. And how do we decide which one fits the need.
Or if you can point me to where this is explained.
Package just means the "shape" of the component, e.g. whether it's designed to be mounted through-hole (as you would on a breadboard for example) or surface-mounted.
Speed is exactly that - how fast the clock oscillator can run (which affects how quickly the '85 can execute instructions and perform other tasks).
For example, I have the ATtiny85-20PU. They are 8-pin DIP and will run up to 20MHz, although in my setup I usually have them running at 8Mhz as it's more than enough for my applications. If in doubt, those are probably the ones you want for prototyping with!
Then there are the "V" parts, which run at lower voltages, although also at slower clock speeds, e.g. ATtiny85V-10PU.
The datasheet explains all...