Dear Divid,
              When a user accesses a Launched ClickOnce application,
he clicks a link that points to the deployment manifest. The deployment
manifest has ".application" extension. The DFS(Deployment Framework
Service) reads the deployment manifest, locates the current version
from the application store, and launches it.In case of  Installed
application, a client-side .NET component executes every time a user
runs the application. The startup SHIM reads a cached copy of the
deployment manifest to find the update settings of the application. Its
first task is to answer , "Is there a need to check for updates?" If
the answer is no, the application loads from the local program
directory, and the work of the SHIM is finished. if the update settings
in the manifest do call for an update check, SHIM reads the location of
the deployment provider and calls it to determine whether an update is
available. If the application is up-to-date, the SHIM launches the
application from the local program directory. If an update is
available, the application gets updated.

              The client-side SHIM queries the cached manifest to
learn whether an update check was necessary.
Using an Installed ClickOnce deployment, you have a number of update
options to choose from. you can refine this process by configuring the
ClickOnce application to immediately check for updates upon startup.
you can allow the user to choose whether to accept the update.
You can also make the update mandatory by specifying the minimum
required version for the application and then setting that version to
the latest version of the application.
Another option is to programmatically implement updating. You can, for
example, add menu items to your application to check for updates. This
gives control to the user regarding when to update the application.

I hope it clears Click-Once to you.

Regards,
Naveed Ahmad Bajwa
http://bajoo.blogspot.com/