I will try to keep this blog simple and precise.
Updates and Security Updates: They frequently contain security fixes. These are also known as GDR, General Distribution Release.
Hotfixes: Individual customer reported bugs will be fixed. These are also known as LDR, Limited Distribution Release.
Service Pack: The service pack is a major update in the life of an OS.
GDR VS LDR:
As described earlier GDR is General Distribution Release and LDR is Limited Distribution Release.
the below diagram explains how the flow work for each Service Pack.
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