Consider the example of an assembly that contains two components: a mold base and a design component.
In the context of the assembly, you create a cavity feature in the mold base, with an external reference to the design component. The update path for the cavity feature is therefore contained in the assembly.
Now, suppose that you need to change the design component and you need to update the mold base accordingly.
If the assembly is open, the cavity feature in the mold base updates automatically when you make the changes to the design component.
If the assembly is closed, the cavity feature cannot be updated to reflect the changes until you open the assembly, thereby making the update path available.