The replace is a string function used in MySQL. The UPDATE is a command telling the database what to do. So for example if you want to perform changes in a database table you would use:
UPDATE table SET field = newvalue;
On the other hand REPLACE is a function which can be used to replace one string with another and return the new string.
SELECT REPLACE(field, oldstring, newstring) FROM table;
The SELECT statement uses REPLACE to display a new string replacing occurrences of old string in the column "field". You can use UPDATE and REPLACE together, for example imagine a table contains a field which has data that needs to be modified, imagine it contains the string "Field: data" and we want to strip off "Field: " resulting in only the data we would issue something like:
UPDATE table SET field = REPLACE(field, "Field: ", "");
REPLACE is not only a function, it's also a (non-standard) statement
Originally Posted by da manual
REPLACE works exactly like INSERT, except that if an old record in the table has the same value as a new record for a PRIMARY KEY or a UNIQUE index, the old record is deleted before the new record is inserted.