How to update themes and plugins?

Before you update

Check the changelog to see what to expect.
Check the updated documentation.
Make sure that all your custom modifications (if any) are in plugins or child themes.
It's a good idea to back up your database when updating to a next major release (e.g. v1.0 to v2.0).

Manual updating

It's recommended that you try manual updating at least once because this is the only way to restore backups:

Download the current stable theme version from https://themeforest.net/downloads (you must be logged in) or the current development theme version from https://docs.ikonize.com/daisho/repository/.
Log in to your server (using a FTP client like Filezilla, see Codex: FTP Clients)
Go to /wp-content/themes/theme-name/ and rename it to theme-name-backup.
Create a folder named theme-name and upload the new files these.
It's very likely that no other action will be necessary to make it work but it's a good idea to check your posts, pages and projects to see if everything still looks like before. If not, you can either rename the folders to how it was to restore the previous version or check the updated documentation as it contains updated information about current setup.

Automatic updating

Download Envato Market plugin, install it and it will enable you to update the theme automatically. It also supports backups. (Envato WordPress Toolkit plugin is not supported anymore.)

Notes:

Updates are free and you can redownload them at any time from https://themeforest.net/downloads as long as the product is present on the marketplace.
Dashoboard → Updates does not list updates to themes other than free themes from wordpress.org. Therefore, ThemeForest created a special plugin that adds ThemeForest themes there too. It's called Envato Market.
ThemeForest usually doesn't notify you about new updates to the items you purchased unless you select this option in "Downloads" section for each item.
Envato Market looks for theme-name updates (e.g. daisho). The theme folder must be named exactly this way for the plugin to recognize it.
You can rename themes (by changing the folder name and/or the data at the top of style.css) but renaming them is discouraged and it's a better idea to create a child theme with a name of your choice. If you renamed a theme, Envato Market plugin wouldn't recognize it.
Doing modifications in a child theme increases chances that all of them or most of them will be still present after updating a WordPress theme. Some may be gone if a theme changed its file structure, HTML structure, CSS class naming or updated or removed some component.
How to fix "Destination folder already exists. Theme install failed." error?
You must rename /wp-content/themes/theme-name/ to theme-name-backup before attempting to upload the new theme.

FAQ

Q: Should I keep my WordPress, themes and plugins up-to-date?

Definitely yes. WordPress fixes security issues every release (e.g. #1, #2, #3, #4, #5, #6, #7 etc.), bundled plugins may contain them too (#1 etc.) and occasionally some may be affecting our themes or themes/plugins in general (like #1). Therefore, you should keep everything up-to-date all the time.
However, please note that technically the HTML/CSS/PHP/JavaScript code of your website isn't much different whether it's a year 2015 or 2020 or 2025 so if your HTML/CSS template or a WordPress theme was initially written with consideration of upcoming changes (technologies, standards, devices, updates) then you may skip updating it for many years without any negative effects. Generally, if you update your website once a 1-2 years that should be sufficient.

Q: When will the nearest theme update appear?

Will you ever add a feature X?
When will a feature X appear?

The answer to this kind of questions is:

Our themes are up to modern standards and they are based on the default framework called Underscores (which is maintained by core WordPress developers).
The people that develop the themes and plugins for you also answer your support questions. We analyze what kinds of questions are asked and if some feature is frequently requested then it's likely to be added to the product in the future. It may take some time before that happens but the support questions generally guide our development and help us prioritize tasks.
We used to update the themes every 30 days (12 updates a year) but many people were updating their website with the newest version of the themes every single time we released an update and that increased number of questions about updating and number of problems they encountered (mainly because a lot of people modify the parent theme without using child themes and their modifications are erased after updating). We now update the themes about 1–3 times a year. Updates that fix bugs are likely to be released more often depending on the severity of the issues.
If some feature is not present in the theme on the day you buy it you should assume that it will never be available. In reality it's likely to be added if it's something frequently requested (like some popular plugin integration) because that makes the product more useful to more people and that benefits everyone but nonetheless we can't guarantee anything and if some feature is not there please assume that it will never be there.
We generally don't make any promises. We can't specify when the nearest theme update containing new features will be released (and if at all). It will be released when it's ready. We can only inform you when the nearest update that fixes important issues will be released if such issues are found.

Q: Is updating to the next theme or plugin version going to break something?

Yes and no.

Updating our themes or plugins to their next minor versions (e.g. v1.0 to v1.1) will usually not require any additional configuration.
Updating our themes or plugins to their next major versions (e.g v1.0 to v2.0) may require additional configuration.
You should always check the changelog before updating.
After updating you should always review all your pages as well as some blog posts to see if they still look the same way. (If they don't you can always restore the previous theme version.)

Q: My theme is customized, can I still update it?

It depends.

You must make sure that all your custom modifications (if any) are in plugins or child themes before updating. Then you will not lose them.
But updating our themes or plugins to either their next minor or major version may still impact your custom modifications.
If any custom modifications would be impacted then you can update your custom plugin or a child theme to reflect that. These are usually going to be a very minor adjustments like CSS class name changes.
If you have made any custom modifications directly to the template files then you'll need to take that into account when updating.

Q: Something broke after updating. Can I restore the previous theme version?

Yes.

We don't do any permanent database upgrades between minor releases (e.g. v1.0 to v1.1) so switching back is always possible.

Between major releases (e.g. v1.0 to v2.0) database usually doesn't have to be restored either.

You can easily restore your backup copy of the theme by renaming the folder you created during "Manual updating" from theme-name-backup to theme-name. It will still work just like before.