A patch is a small change in a file or few files to fix bug or correct improper behavior of cart. The cart version stays the same.
An upgrade modifies lots of files and database and moves the cart to next version or the version of the upgrade.
You apply patches from the patch/upgrade page - diff and sql patches sections. Upgrades are applied from the first section on same page. For the upgrade you need to upload the upgrade pack and unzip then it will be available on that page to select and run.
However if you are new to XC and have a question like this I would strongly advice you to not attempt doing an upgrade yourself - you can easily damage the installation and database. Hire a professional to do it for you. If you need help we can do this upgrade for you - just open a ticket at
https://www.cflsystems.com/support