upgrade = make something betters/update to a better version update = renew something, maybe it's old and it makes it a new version.

Update = up + date, It means adding more recent info to something, Upgrade = up + grade It means adding more features and enhancing something. In software: Update generally used for bugfixing. while Upgrade used for new software versions better versions like Chromium 60 -> chromium 73

In common practice in the computer software industry, an "update" means a small change. It is usually made available free of charge. It may fix bugs. It may add drivers for some new models of printer. It is usually indicated by a version number in which the first part of the number, the "major version," does not change; for example, from version 6.3 to version 6.4. An "upgrade" means a major change, important new features and functionality. Often, it must be purchased, you must pay money for it. Typically the major version changes; for example, from version 6.4 to version 7.0.

Most of these answers are ok, but I will throw my two cents in as well: update; to be up to date means to have the most current information available. You can bring your boss up to date by giving him the latest sales reports, you can bring your spouse up to date by telling her what she missed on the last episode of Game of Thrones. update is a short way of saying "bring up to date". It applies to software because software is basically just information. Updates to software may or may not include improvements but regardless, it tends to work better when it's code is at the most current. upgrade; in this context, grade means level. so, you bring things to a higher level. You can improve something by either adding functions to it or by replacing it altogether. For example, if you have a computer, you can upgrade it by improving its clock speed, by buying more memory, or by replacing the hard drive with a higher capacity drive. Any one of these improvements upgrades your computer. If you replace the computer entirely, this also counts as upgrading, not the computer specifically, but the level of computer you own. Anything that improves the level or grade of something has been "leveled up" or upgraded.

Update is now usually about information, so a new version of something. Upgrade is actually a better version. It varies slightly depending on what you're applying it too, but that's the general rule.