The short explanation
Unlike an app, firmware is stored in the device itself and runs the hardware directly. Updating it replaces that program. Nothing physical changes, but behavior can change substantially.
Where you run into it
HDMI keeps moving. New displays declare their capabilities in ways older devices were never taught to read, and a device that truncates that data will quietly hide capabilities from your source. A firmware update is often the entire fix.
Two habits are worth having. Export your configuration before updating, so you can put your settings back. And read the release notes — they tell you whether an update is relevant to your problem or not.
How the DR HDMI 8K handles it
DR HDMI 8K firmware is flashed from the CONFIG page of the web interface. The history is a good example of why it matters: 1.2 fixed a hot-plug issue with GPU TMDS termination, 1.3 added DisplayID and 384/512-byte EDID support, 1.4 extended that to custom slots and AutoMix and added DTD retention, 1.5 fixed two-block EDID reading of the sink. Every package also carries the IP command list matching that revision.
Want to test your own HDMI chain?
The DR HDMI 8K is sold through the HDFury.eu web shop.