You dont have to update the firmware. Just ignore it unless your very confident in the update procedure. Fly it first and ignore the update banner. The DJI go app is necessary to activate the drone and perform IMU calibrations. The Litchi app doesn't have all the necessary adjustments but is good flying app.
There was a Mandatory Update a while Back.... and If You Didn't Update, You were Limited to a Very small area to be able to fly in... like 30-50 meters.. But Beginners Mode is a Good Place to Start... And Learn to Fly in Atti Mode...