A leitura da página man do apt-get responde a você.
man apt-get
update
update is used to resynchronize the package index files from their
sources. The indexes of available packages are fetched from the
location(s) specified in /etc/apt/sources.list. For example, when
using a Debian archive, this command retrieves and scans the
Packages.gz files, so that information about new and updated
packages is available. An update should always be performed before
an upgrade or dist-upgrade. Please be aware that the overall
progress meter will be incorrect as the size of the package files
cannot be known in advance.
Em palavras simples, apt-get update
busca as listas de pacotes de todos os reposiotires localizados no arquivo /etc/apt/sources.lis
ou /etc/apt/sources.list.d
dir e os atualiza para obter informações sobre as versões mais recentes dos pacotes e suas dependências.