Those system volumes should be hidden from view by default in macOS. Typically they are mounted at the "/System/Volumes" location and are hidden from view even in the Finder. Someone or something has likely modified the normal behavior of macOS which has exposed these volumes within the Finder.
If you are using any anti-virus software, cleaning/optimizer apps, or third party security software, then uninstall them by following their developer's instructions. These types of apps are not needed on a Mac and usually cause more problems than they solve and would be the most likely reason the "Update" volume has appeared in the Finder's sidebar.
Have you tried removing the "Update" volume from the Finder's sidebar? Try dragging the "Update" item from the sidebar.....you should see an "X" appear, or you may be able to right-click or Control-click on the "Update" item & select "Remove from Sidebar" on the pop-up menu. Hopefully it won't reappear on its own.
And stay out of that "Update" volume as there is nothing in there for anyone. It is only for the macOS system use. If you happen to find a way to modify something there, it will likely break macOS and you likely won't realize it until the next time you reboot the system.