"Updating Python Interpreter" in Pycharm. What does it mean?

When you change interpreter in pycharm , pycharm first update all of the pre-installed packages. Because time to time many changes comes in packages, Pycharm take care of them.

Pycharm is NOT updating the remote interpreter. See this discussion on the jetbrains feedback site.

In short, the message is badly worded - what's actually happening is downloading remote libraries, which are used for pydoc, method signatures, looking at library code etc...