it updates the firmware/software that actually runs the whole thing. It's basically a full "embedded computer" that watches the sensors and figures out how much fuel to inject and when to fire the spark plugs, and chrysler (back when the XJ was still in production, and for a while after) would periodically issue updates and fixes to problems they discovered with the software after selling the particular jeep you have. Putting the latest firmware on the ECU generally will improve performance, safety, fuel economy, diagnostic systems, reliability, or some combination of the above.