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The Management Engine is literally a little embedded computer system with its own OS that manages the operation of your main computer system, completely separate from the BIOS. It needs to be updated for security purposes and general compatibility: for example, without up-to-date ME firmware, your Z690 motherboard could not run a 13th or 14th gen CPU.
Most motherboard makers update the BIOS and ME at the same time, the notable exception Being Asus which requires them to be done separate. However that doesn’t mean a newer ME firmware update might not come out after a BIOS is released.
While I feel it’s moderately important to update the ME for compatibility and major security reasons, I wouldn’t worry much about minor updates. Most people NEVER update their ME, even if they should.
Importantly, it has access to parts of your computer even when your computer is turned off. This is why it's important to keep it up to date.
https://www.eff.org/deeplinks/2017/05/intels-management-engine-security-hazard-and-users-need-way-disable-it