Updating can be done in one of two ways.
1) You can just copy all files from the zip file over the top of the old ones on your server. (this is not the best way as some of the old files may have been renamed or removed from this update and they would be left on your server)
2) Remove all files and folders other then the UPLOAD & INC FOLDERS from your server, then upload the new files from the zip to your server.
Then just navigate to your site were the installer/updater script should run to check the file structure and setup any new settings.