When you use the Update option, you first have to select a lookup field. This means that the application will search in that Salesforce field for a specific record that is already registered. If the value from the lookup field matches with a previous entry, the record will be updated.
The next step is to decide what to do if no match is found:
Create new record – It means that a new entry will be registered if the new record doesn’t match with a previous one.
Skip entry – If there is no entry matching with a Salesforce record, no record will be updated and no new record will be created.
After you select a lookup field, make sure that you map that Salesforce field with a form field below.