It only updates POIs and new roads, at most it installs some new POI categories and may refresh some buttons with new icons and stuff. The interface remains the same.
You install the update through the USB socket under your arm rest: you receive a USB flash drive and an unlock code that you enter on the touchscreen to upload the data onto the hard drive in your car. You'll be asked for your VIN when purchasing the update - no "sharing" with other similar vehicles like the good 'ole CD or DVD days, since the unlock code is generated with your VIN and will only work on your car. The update takes a long time to get installed - an hour or so, IIRC - but the good thing is that it resumes from where it left off if you can't wait around with your engine running for the process to complete. No dealer required for 2012+, while the system and process are different for 2010-11s and a dealer does need to perform the update on those model years.
On a 2012 with a 4-year old database, it may be worth spending the money, but it depends on how out-of-date the data seems to be in your area, so you should decide. With free and always up-to-date alternatives available on smartphones nowadays, these $200 satnav "updates" are starting to look like relics from another era.