In FrooxEngine, an update refers to execution of the main engine loop. During an update, physics are calculated, synchronization packets are sent, permissions are re-evaluated, and many other events and checks are performed. Every user has their own local update time.
As of the time of writing, the time to perform an update is limited by the framerate of the Unity renderer. This may change with the implementation of inter-process communication and eventual switch to a new rendering engine.