We define an "update" as applying a patch or point release (i.e. update version 4.1 to version 4.2). Updates may impact functioning applications, but often can be applied without having to make changes to applications.
An "upgrade" is defined as moving from one major release to another (i.e. upgrade from Release 4 to Release 5). Upgrades often involve changes in data structures and program processes, and therefore are more likely to impact a functioning application than an update.