To be clear, software update generally means to install software to update the macOS currently running on the Mac; update Catalina 10.15.1 to Catalina 10.15.7, for example.
To update your current macOS, click the Apple icon > About This Mac and then click Software Updates.... If there are any updates available for your Mac, they will be listed and you can apply them when you like.
A software upgrade is usually a generational step up to a newer macOS; upgrade from 10.13 High Sierra to 10.14 Mojave, for example, or from 10.15 Catalina to macOS 11 Big Sur.
Do NOT upgrade until you have made a Time Machine or other backup of your startup drive.
The macOS version you can upgrade to depends on the year your Mac was released.
Click the (Apple) menu at the top left of your screen and choose About This Mac.
macOS 10.13 High Sierra is compatible with the Macs listed here:
https://support.apple.com/kb/sp765?locale=en_US
macOS 10.14 Mojave is compatible with the Macs listed here:
https://support.apple.com/kb/SP777?locale=en_US
macOS 10.15 Catalina is compatible with the Macs listed here:
https://support.apple.com/en-us/HT210222
macOS 11 Big Sur is compatible with the Macs listed here:
https://support.apple.com/en-us/HT211238