Well, in theory, you could just replace the Kirby and Panel folders.
It is, however, NOT recommended, to do an update directly on the live server. Better test on your localhost first, if everything still works, before changing anything on your live site. Especially plugins that are not up to date may break your site otherwise.
If your host gives you enough control to do so, you could have two instances of your site:
The second one can be a copy of the original one. Then replace the kirby and panel folders in the second instance, and test it. Of course you need to be able to configure your host so that you can point a domain or subdomain at the second instance, like:
www.mysite.com -> htdocs/mysite
test.mysite.com -> htdocs/mysite-beta
And if everything is alright, you can rename the folders, e.g. to mysite and mysite-archive.
Locally I tend to do the same thing, but since I can allow the local site to break I often rename the kirby folder (kirby-archive) and swap in the kirby folder from the new release. Likewise with the panel.