As Kefuddle says, the update rewrites the operating software onto the GPS's reprogrammable chip. You download the file from the garmin website to your PC and then upload it to the GPS. Unless you have a freak powercut in the few seconds that it takes to transfer, it is hard to imagine having a problem. It's not rocket science.
I have updated the software on a Garmin GPS III and a GPS195, both without problems.
Basically, the software update is to address any bugs that have come to light and add perhaps a little extra functionality here and there. From memory, the Garmin website actually says what each upgrade does. Have a look and see if the upgrade is worth bothering with or not.
Mr. W