Once you hit the upgrade button the project manager replaces the dlls of your project with the new ones. Then when firstly browsing the site, the upgrade scripts are initiated, upgrading your database and files. However if you are upgrading on local environment, please make sure that the site is running perfectly prior to upgrading, because if you lack some permissions or it is not set properly, the upgrade process will be corrupted.
the Telerik team
Do you want to have your say in the Sitefinity development roadmap? Do you want to know when a feature you requested is added or when a bug fixed? Explore the Telerik Public Issue Tracking
system and vote to affect the priority of the items