No, you don't download the handheld software TO the Desktop Manager, but to your PC, separately from Desktop Manager.
Why upgrade or update your handheld software: There could be various reasons such as bugs and fixes made in newer releases, new functions added, or even just to fix some odd issue you might be having on your device. Or, just because you want to do so.
And, if you don't need to, don't want to, and are having no issues on your device, you don't need to upgrade.
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