Update Sites are used to organize and export features so they can be installed into Eclipse applications.
To create an update site you must develop a site.xml file and build the site. PDE provides an editor and project for creating sites. A site will contain one or more features organized into categories.
When the site is built, the included features (along with all plug-ins part of those features) will be exported into an installable form. The exported plug-ins and features will be put into two folders "plug-ins" and "features". Two other files, "content.xml" and "artifacts.xml" will also be generated and contain metadata for the exported files that make installing easier. These files, along with "site.xml", collectively form an Eclipse update site. To make the update site available to others you must make all these files available in a shared directory or web site.
New Update Site Project