Updates are really important for several reasons: firstly, they solve problems with the software. For example, no software is perfect and runs smoothly all the time, but the software manufacturer often identifies problems thanks to users feedback and will solve (hopefully) the problems. These are known as bugs.
Secondly, if its more serious stuff, like your operating system or communications software like your e-mail, then it can solve security holes in the software. These holes, in theory, need to be plugged from allowing unwanted visitors to get into your computer to read your personal data and drift around your computer without your knowledge or consent.
Lastly, for software which needs regular updates, i.e. once a week, like antivirus software. The reason that the cycle of updates is so short is because no virus is the same and the way it attacks that system can be different. So when you are download updates form the antivirus software manufacturer it is fixing several things, firstly any software bugs, secondly any security issues with the software and lastly the definitions of all the millions of viruses out there.