It makes a backup of the existing plugin/theme as well in the media folder so you can always revert back or refer to the earlier version. If you made any changes to the source files (instead of child theme), you will need to redo them of course no matter what method you use for updating. Hope this helps.
The update is ready to download.
You can re-download the theme files which will automatically get you the new version of the theme. You can do that by navigating to the downloads tab in the themeforest.net. You will have to login to the site with your themeforest account.
If you want to be notified about the new version release, then just check the “Get notified by email when this item is updated” option in the downloads tab and you will receive email notification from envato.