Palm provides system updates wirelessly to webOS phones. These updates are released periodically and are intended to increase stability, improve the user experience, and in some cases add functionality to the phone.

Unlike the previous update, WebOS 1.0.4 doesn't bring enhanced applications, but it "addresses several security issues with Palm webOS software".

Also, it looks like you can no longer install homebrew apps (i.e. unsigned apps) after you've updated your Pre to WebOS 1.0.4.

The firmware update should be downloaded automatically, over the air, but users can also check for it manually, "by opening Updates."