You can update your version of Fedora through the updater software as well but it’s a very clear separate process that is initiated manually.
Distro version updates bring major updates to key packages - the one you’d notice most would be to Gnome, the desktop environment. There will be other things too that get only bugfix and security updates during the life of that version, and then after a while that version will lose support and you won’t get any updates at all (docs.fedoraproject.org/en-US/releases/lifecycle/).
Updating is very safe and reliable. I’ve had my Fedora install at work for 3 years, updating periodically and it’s working extremely well.