To update Virtlet to the newer or older version just change its image name/tag in DaemonSet definition:
kubectl -n kube-system edit ds virtlet
You should changed in the 4 places there.
During the upgrade state of VM pods will change to ContainerCreating
but there is nothing to worry. VMs are still running. Kubelet just can not get state of the VMs because Virtlet is not available during update.
When Virtlet update is done check that VMs are still running. Attach to cirros-vm:
kubectl attach -it cirros-vm
and run uptime
command.
Virtlet updates are done using standard DaemonSet update mechanism