"npm update" is command on npm CLI, which updates a specified package(s), or all packages listed, to the latest version available in the npmjs repository, whilst respecting semver.
npm update [-g] [<packagename>...]
is a command on npm CLI, which updates a specified package(s), or all packages listed when no package name is specified, to the latest version defined by its tag
config in the npmjs repository.
The rules of semantic-versioning (aka: semver) are respected when determining the appropriate latest version of itself to update to.