New categories fed from template blog plugin

If I have sites linked to a template blog, will these site's categories update if I update the template? I'm testing this out and it doesn't seem to be the case. But the plugin user guide has this sentence in it.

"Any changes made to a template blog affect any sites created after you’ve made the new changes."

I'm not really sure what that sentence means. To me it sounds like if a template blog's categories are updated then the blogs using that template would update also, but that doesn't seem to be the case.

-Jeff