how to modernize ipod touch 4 generation?

Hello

we have an ipod touch 4 generation

what is the most modern versions of iOS etc we can use in it?

is there some updates you would recommend to modernize it?

or if not - is it possible to erase all personal info (to be able to give it to somebody that appreciate it). is there a how-to-link to this cleaning procedure? I feel hesitant to full reset since i am afraid not to be able to install semi-old versions of apps and iOS that is now in the device.

/H