What does "update all"?
If a new version of a layer is available, it will update with the latest version your current layer stack.
1- Your layer stack contains another material layer stack. If you update this second material layer stack, you can get the new version of it in your current layer stack
2- A new version of an embedded filter or material is released, you can update your layer stack to get the last version
3- While you're working on your layer stack and creating a custom filter in Substance Designer, you can iterate between Substance Alchemist and Designer and get always the latest version of your custom filter without relaunching Substance Alchemist