In general, the Installer is a very flexible program for installing just
about anything. Since the Installer is designed to be programmable, the
number and sort of items it replaces can vary, depending on the installer
script.
In the case of updating a System or Finder file, the Installer will usually
only replace resources it identifies as: 1. Apple's and 2. outdated. This
method is better than simply swapping an old System for a new one because it
lets you keep custom setups including Desk Accessories, Fonts, and special
drivers, like MacServe and InBox.