It is a reformat, whole new install of your operating system.
Generally speaking, what it does is allow your computer to access more memory. It is a whole new operating system because you are talking orders of magnitudes different sizes of numbers.
So it isn't really just running an upgrade. It is a big deal, and some computers you can't even do it. If it is a newer computer you should be alright. You will need your computer's manual to know for sure.
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