Updating your install is needed in order to be ensure that your website will not be compromised by malicious activity.
As technology changes and advances in website development, so do ways to compromise that technology.
Due to this, modules and the core functionality of the install need to be updated when a 'hole' or 'exploit' is found. A hole or exploit being a way for someone to maliciously damage the install.
The enormous benefit of the Drupal system, of which your website is based, is that the community and module owners/users constantly work together to keep their work secure. If someone's install is hacked and they figure out what happened, they submit patches to core and modules, then we need to apply these patches to our own installs so that the same thing doesn't happen to us. These exploits range from harmless/annoying items such as form spam, to database corruption which can destroy the website and result in massive loss of information- which in some cases, may not be restored.
Updating the install doesn't guarantee 100% security, but by far and away makes your install far less likely to be corrupted or abused. Beyond this, the more frequently your install is updated, the easier it is to update. For instance, it is easier to update from a version 1.2 to 1.3, than from 1.2 to 2.2- which could possibly be anywhere from a day to years newer than 1.2 with a variety of extensive changes, if not completely re-written.
Updating the install can offer better functionality as well. We can send you notes on what updates took place per module as we update, this way you will know about new functionality items that you may want to use.
Core and modules have two different status' of requiring updates:
- critical - These being updates that will resolve a security issue.
- standard - Resolve bug fixes and functionality updates.
Critical updates may contain bug fixes and updates as well, however usually critical updates are done as a counter to a hole found within the code, not with the purpose of updating functionality.