When you upgrade a P4 Plan server, P4 Plan continues to use the same database files that were active before the upgrade. It does not automatically switch to the most recent backup as the active database.
The backup taken before the update serves as a recovery point if the upgrade fails and an immediate downgrade is required.
The backup process also consumes the transaction log into the database files. This is relevant when you upgrade, because the transaction logs can only be read using the same database version that created them. This means that when you upgrade, changes that have been made since the last backup are preserved so the upgraded server can recognize them.