When do I need to update the index?

I have an indexed a large folder on my Mac, and was under the impression that if I added a new file to that folder, it would not show up in my DT index of that folder unless I selected that folder in DT. (Or maybe I misunderstood.) But today, I added a new file, and it showed up instantly in my DT index without my touching anything in DT except what I typed into the Search bar.

So my question is: under what circumstances would I ever have to "Update Index?

That command is generally used when indexing items in a cloud-synced location.