Some code edits may not transfer automatically. Changes made through the theme editor, including app embed settings, are copied to the updated theme. Code edits are copied too, unless they conflict with the new version, in which case you need to add them again manually.
Your content stays safe. Products, collections, blog posts, pages, and navigation menus are managed separately in your Shopify admin. These won't be affected by a theme update. However, any code customizations that conflict with the update need to be recreated.
You can run both versions simultaneously. The old version remains in your draft themes, so you can prepare the updated theme before publishing it. This lets you compare versions and switch back if needed.