In the current doc, it says that -update or -overwrite won't copy the directory hierarchies. i.e. the file structure will be "flattened out" on the destination. But this has been improved already. (Need to find the jira id that made this change.) The dir structure WILL be copied over when -update or -overwrite option is in use. I misunderstood the doc. I will try to improve the expression then.
The main caveat for -update or -overwrite option is when we are specifying multiple sources, there shouldn't be files or directories with same relative path.