What does Maven Update Project do in Eclipse?

It syncs the Eclipse project settings with that of the pom. If you for example change important plugin settings, such as the output java version, you will find that Eclipse will ask you to update the project and afterwards the configured Java runtime in the project will have changed to reflect what your Maven pom indicates.

That is an important thing to keep in mind: the Maven pom is the lead in this kind of project setup. If you want settings to change, try to do that through the pom and not through Eclipse project settings directly or doing a project update might revert what you have changed. There are usually some things I have to correct myself anyway though, such as build path exclusions that m2eclipse likes to put in and strange deployment assembly configurations.

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