How does the installed app know which release to download?

The application uses a Velopack update source that points to a release list and the packages it references. Keep test releases on a separate channel and verify the installed test copy reads that channel. Check packaging requirements for the intended system. Mac packages are built on macOS.

What belongs outside the part an update replaces?

On Windows, Velopack can replace the installed version’s current folder during an update. Put records and preferences outside it in a suitable user data location. Keep access to the release store and its release list, packaging setup and signing credentials so you can make the next version.

Would a test build update while a customer stays on the old version?

Draw a fictional notes app with a private test channel and a customer channel.

Draw two release lists
Put version 2 only on the test list. Mark which list each installed copy should read.
Trace one local note
Draw the replaced application folder and the separate data folder. Mark which note should be present after version 2 starts.