What is a firmware update and why is a firmware update important?

Hi, can someone explain what a firmware update is? I want to understand why a firmware update is important and when I should perform one.
 
A firmware update is the update of the software that exists in the hardware (such as routers, phones or cameras).
It’s important because it:
  1. Code defects and enhances security.
  2. Enhances performance
  3. Components Security additions or compatibility.
Updates will assist your device to be run efficiently, as well as safely.
 
A firmware update is a software upgrade that improves the functionality, security, and performance of a device’s hardware. It’s important because it fixes bugs, enhances stability, and adds new features to ensure your device runs efficiently and securely.
 
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