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If we update an app in Google play does it count +1 for the number of downloads?
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On Google play, if I download an app, uninstall it and then download it again, how many times it has been counted in 'downloads' ?

Once. The downloads are counted per account that the app was installed for.

So if I have a device with say, 3 user accounts on it, and I install the app on all 3, it counts as 3 downloads. Even after the app is uninstalled, the total download count doesn't go down. It is just not increased if the same user installs the app again.

A single user's install, irrespective of the number of devices, counts only as a single download.
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No it doesn't.
But if the user Uninstalls it and then installs it then it is shown as one download.

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