Firmware is the embedded software which controls the Network Data device. Think of it as the Operating System that runs the device.
The manufacturer D-Link occasionally issues updates to the firmware to correct problems (bugs) and add new features to how the Network unit operates. It is generally not critical to update the firmware, but reading the update specs will tell you whether they are correcting a problem that may affect us.
For Example: As of September 2009 we are are running version 1.06 of the firmware, and it has a problem. The unit is supposed to email the administrator (setup as glenlan@gmail.com) of exceptions and failures, but a problem with version 1.06 is preventing this from being set up. This means that if one of the drives were to fail the administrator will not get notified. So it will be a good idea to update the firmware when D-Link has corrected this problem, which they say will be in version 1.08.
Before updating the firmware, all data on the unit must be backed up just in case the data on the unit gets lost in the update.
Check the D-Link website for the DNS-323 and click on Support Resources and Firmware.