Not quite on topic, but it was mentioned earlier - is there a way to auto-set the Blizzard combat log filter via LUA? I'm sure there should be... such a line could be incorporated into this very jury-rigged combat log modifier addon.
If I knew LUA (instead of the Pascal, C, C++, Java that I'm familiar with :P) I'd look into it some more. As-is, I'm best useful at pseudocode and troubleshooting. *grin*
Then, all you need to know is that WoW operates on events. Basically, no addon code is running until some event occurs, and wow will then call all the functions that registered for that event of interest when it happens. For example, UNIT_HEALTH event is thrown when some unit's health changes, and unit frame addons would listen/register to this event to update hp on their unitframes.
An OnUdate is an event that happens every frame. So if your FPS is 120, then any OnUpdate function will be running 120 times per second. Of course, the more OnUpdates you have, and the more things they do, the less FPS you get.