The ZD first reboots to apply the update to itself. During that period of time the network acts as if your ZD is down (e.g. existing clients pass data, no new clients can associate)
Then when the ZD comes up, the next time the AP makes contact again (usually within seconds), the ZD upgrades it, and the AP will bounce.
Long story short, in my experience it's best to declare the network down. For something on the order of maybe 10 minutes for the whole process, not counting any ChannelFly destabilization time after the reboot.
I definitely would not apply ZD updates during times that users can't tolerate downtime, and like Michael I completely agree that staying up to date on your ZD is important. Ruckus has fixed a lot of the mystery wifi issues I've noticed over the years.