Hi @jobuu
Have a look at this tutorial:
https://www.digitalocean.com/community/tutorials/how-to-update-a-digitalocean-server-s-kernel
You would want to update kernel, when there is a security hole, yes.
Sometimes there's updates which fixes hardware issues or speed improvements, but they generally don't apply to virtual servers like DigitalOcean.
It's not as critical important to update kernels compared to Apache/Nginx, PHP, and other services, which are accessible from the outside, but a good rule is to keep everything update-to-date and configured securely.
