Microsoft develops updates and fixes to recognized issues and releases them to customers as hotfixes. On a regular basis, they combine many of these fixes into a single package and make the package available for installation. These packages are called Service Packs. Microsoft recommends that all customers install the most current service pack available. Service packs include security updates, DCRs, and Hotfixes (all updates that resolve issues discovered by customers or by the Microsoft internal testing team).
Service Packs are cumulative, meaning that each new service pack contains all of the fixes that are included with previous service packs and any new fixes, and you do not have to install a previous version of a service pack before you install the latest version.
Next: Automatic Updates