You can go through the process of saving the new version of the object, just like you did before. Carefully use the same name as before, and ArchiCAD will ask you if you wish to overwrite the original. Note - you can't just point at the previous object and pick up the name, you have to type it in exactly the same, then it will overwrite the previous one.
All instances you've placed of this object will update after you save the new version. Sometimes you may need to use the View menu > Refresh > Rebuild the 3D window or Sections etc.
Modules and custom library parts have different strengths. A module is good to use when bringing in a group of elements from a reference file or interactive legend Quick Room or similar; if you merge the module, or copy and paste it from an interactive legend, you may modify it freely in the destination file; if you hotlink it in, then it is linked and will be updateable if you change the source file and use the Hotlink Manager to Update the instance(s) in your destination file.
Custom library parts are generally used when you work with multiple elements to create a single "thing" such as a casework object, and you don't want or need to adjust or pull apart the components most of the time. Of course, you can always revise or rework the custom part and update everywhere it's placed; or copy the original components then modify them to create a variation, a new library part similar to the earlier one.
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