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There are many types of upgrades modules, each categorized with their coorsponding spacecraft system they belong to.
For a full list, see the Upgrade_Modules category.
A city containing an airport repair shop is able to rent their services to install upgrade modules. The service costs a bit of money and will require the spacecraft is moored at a space station or in the city for a little while.
Using the Trade communication channel's Spacecraft Service menu, a full list of all spacecraft systems that can be upgraded are listed. Selecting one and requesting modules will ask all cities in range which upgrade modules they have for that pretickular spacecraft system.
Manually installing an upgrade module requires the spacecraft to be moored to a space station or landed anywhere, and then rigged for repair by powering down all systems onboard the spacecraft. The upgrade module is then installed by using it on spacecraft module of the coorsponding type.