I've seen the phrase "firmware update" a few places before. Why and how do I update it? What changes are made to my computer?
EDIT: I originally wrote "what it firmware?" but I'll save someone the trouble of posting the wikipedia article
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firmware is a term often used to denote the fixed, usually rather small, programs and data structures that internally control various electronic devices
...and people update it because:
Common reasons for updating firmware include fixing bugs or adding features to the device.
Seriously, this information is in the Wikipedia article itself. What exactly do you want by asking about firmwares? "How do you update", depends on the device you want to update. Each eletronic device has specific procedures to do it.
What is firmware?
In computing, firmware is software that is embedded in a hardware device. It is often provided on flash ROMs or as a binary image file that can be uploaded onto existing hardware by a user.
Firmware is defined as:
the computer program in a read-only memory (ROM) integrated circuit (a hardware part number or other configuration identifier is usually used to represent the software);
the erasable programmable read-only memory (EPROM) chip, whose program may be modified by special external hardware, but not by [a general purpose] application program.
Source: Federal Standard 1037C.
What happens when I update it?
In practical terms, firmware updates can improve the performance and reliability, indeed even the basic available functionality of a device, and many devices benefit from regular firmware updates. One of the most common devices to have regular firmware updates are recording devices such as optical media writers (DVD, CD, Bluray), as media technologies extend, so firmware updates ensure hardware is kept up to date and compatible.