When you add a plugin or a theme to Favorites by starring it on the Plugins/Themes > Install page, and you then install that plugin/theme through the Plugins/Themes > Favorites Plugins/Themes page, you will always install the latest version available on the wordpress.org repository.
However, if you add a plugin/theme by uploading a ZIP file, then only that version will be installed when installing it through the Favorites page. It’s a rather tricky problem to have those plugins/themes automatically updated, especially when it comes to premium versions that are not available on the wordpress.org repository.
But please feel free to make a suggestion about this on our feedback site.
That way, others can vote for it, letting us know which features our users want the most.
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