"hg update" by itself brings your working directory up the most recent changeset available in your local repository (depending on when you did "hg pull").
You can also specify a changeset ID or tag with "hg update" in order to set your working directory to a specific version. Example: "hg update 00788393d185" "hg update R-1.98.2" Also, "hg up" is a shortcut for "hg update". All of hg's commands have shortcuts depending on what other commands share the first couple letters.
