Usually you take your downloaded update version of the game, open the main folder it, then highlight all the files and subdirectories in it and drag those into the old game directory. Then click to overwrite all files.
Depends, if it's Ren'py and it is specifically a update file only you 99% of the time just drop it in the Game folder. If it's just a new version of the Ren'py game always fully delete the old version and use the new one since Ren'py keeps all your saves for you somewhere else even if you delete the game.