This column can sometimes cause confusion if it is seen as a, "Agent Last Connected" time. But there are specific agent events that cause this column to be updated.
Events which cause the Last Update Time to refresh are
15.1 and later also adds these events that will trigger Last Update Time to refresh
*A policy must be directly updated, updates to user groups will not cause an update event.
For those interested in an "agent last checked in" field there is an open enhancement request; PM-2443.