This program establishes a registration key to make your Windows version appear to be XP Embedded (POSReady) – used on certain systems such as ATMs – which has extended service for many more years. It won't modify any file on your system.
The XP Update Extender updates can be done just by clicking on the 'activate' button. This way, if a new official update is launched for the XP Embedded version, it will also show up on your Windows update client and you'll be able to install it in the usual way. Keep in mind that this program is not officially approved by Microsoft, so in some situations it might alter how your operating system works, with unknown results.
The developer warns that Microsoft can block this service at any time.