What is Firmware?

Definition: The term "firmware" refers to the system software of a hardware device.
PSP firmware is the PlayStation Portable's embedded system software. PSP Firmware can be updated via software provided by Sony, but cannot changed by the user. Updated PSP firmware is sometimes included on UMD game discs; it can also be downloaded from the PlayStation website, or retrieved directly by the PSP using the "Network Update" function.The PSP's firmware can be updated by visiting the PlayStation website.

How To Find out Which Firmware Version on PSP ?
If you think you might need to update your PSP's system software/firmware, or you're thinking of trying PlayStation Portable homebrew applications, you'll need to know which version of the firmware your PSP has installed. Follow these simple steps to find out.

Turn on the PSP.
Go to the "Settings" category.
Scroll down to the "System Settings" icon and press x.
Scroll down to "System Information" and press x.
The screen will display the PSP's MAC Address, System Software Version, and Nickname.
The "System Software Version" is the firmware version.