particle update command updates to the system firmware version for the version of the CLI you have installed, not the latest system firmware release.
For Windows users who used the Particle CLI installer, it will be updated automatically so it usually is the latest system firmware release.
For Mac and Linux users who installed manually earlier, you need to manually update the CLI to get newer system firmware versions.
sudo npm install -g particle-cli
However it’s not a bad idea to switch to using the automatically updated version. To do that, uninstall the old version, then install the new version using the CLI installer. In addition to auto-updating, the new version doesn’t require sudo and doesn’t depend on your global node install.
sudo npm uninstall -g particle-cli
bash <( curl -sL https://particle.io/install-cli )
There are two parts to a firmware update, the version you are targeting, and the version installed on the device. For Wi-Fi devices, there isn’t really much of a difference, because when you target a higher system firmware version than is on the device, it goes into Safe Mode (breathing magenta) and then gets a system firmware update over-the-air using the safe-mode-healer.
Non-product Electrons have safe-mode-healer disabled, because the updates occurs OTA and can use a lot of data. Thus if you target a higher version that is installed, the device will just sit in safe mode, breathing magenta, waiting for you to manually upgrade the Electron (either by USB, or manually OTA).