If you use the standard Raspberry Pi OS update/upgrade process (found here), this will automatically update the kernel to the latest stable version. This is the recommended procedure. However, in certain circumstances, you may wish to update to the latest 'bleeding edge' or test kernel. You should only do this if recommended to do so by a Raspberry Pi engineer, or if there is a specific feature only available in this latest software.
Instructions for upgrading to the latest pre-release and testing software can be found here. This page also has instructions on how to return to the standard software.
It is also possible to build your own kernel using the latest top of tree code from the Raspberry Pi kernel respository. Instructions for building and installing can be found here