clean install: you make a backup, nuke the computer, install a fresh upgraded copy of the distro you want from a live usb, copy your data again to the computer.
upgrade: you wait ‘till the distro’ developers release an upgrade you can directly install from your soon to be old distro, you use a command like sudo do-release-upgrade
and why do you upgrade like that?
I almost always prefer clean installation when possible, while making sure to backup important content from highly accessed folders like Desktop, Downloads and Documents (on Windows), for example.
It just feels nice! Nice and fresh.