Update` in PyMongo refers to the ability to change a document in place. This is achieved through two functions: `update_one` and `update_many`. Each update operation can take a range of update operators that define how a document can be mutated during an update. The `$set` operator is used to set a field to a new value or create a new field if it does not exist in the document, while the `$push` operator is used to push new elements onto the end of an array field. The `update_many` function allows updates to be applied to more than one record by using a filter that applies to multiple documents. Additionally, the `upsert=True` flag can be used to insert a new document even if it does not match the initial clause, making it useful for handling both existing and new data in a single update statement.