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It will only overwrite and update your core XOOPS files and some system modules like eg system, profile and Protector and system themes as eg default. (see the directory listing of the archive) If you did not alter your previous running version with patches and hacks, you should not be concerned, else you may have to apply them again. Other modules like news, forum or albums or themes are unaffected.
But before doing things with major impact on your site such as upgrades, take always a full backup (files and database).
