In essence, a firmware update rewrites the (typically 25Q32 or 25Q64) that holds the bootloader and the NAND flash (main firmware).
If the Bootloader is corrupted (hard brick), USB updates fail. The MSD338 utilizes an ISP protocol accessible via the VGA port (using a specialized ISP dongle) or via the UART headers on the PCB. Cvte Msd338 512m Update