Apple has issued an update to its officially supported release of Java for OS X. This update addresses security and compatibility bugs; however, it also takes additional steps to distance users from the Apple-supplied Java versions in favor of the latest ones developed by Oracle.
The update brings Apple's version of Java to 1.6.0_65, and is an update for OS X 10.7 or later. As with most updates for Java, this one addresses some known vulnerabilities in the runtime, and is a recommended update for anyone who uses Java.
In addition to bug fixes, Apple is using this update to further encourage users to switch to Oracle's Java runtime, especially for Web-based Java services. When this latest update is installed, according to Apple's documentation it will remove the Apple-supplied Java plugin, and result in a "Missing plug-in" section of a Web page that tries to run a Java applet.
If you click on the missing plug-in message, the system will direct you to Oracle's Java Web site so you can download the latest version of Java 7, which will not only support the latest features in the Java runtime, but also include the latest bug and vulnerability fixes. Apple's last supported version of Java is Java SE 6, and since handing the reigns over to Oracle, has progressively stepped back from supporting the runtime in OS X.
Unfortunately even with Java 7 available, some programs that run in OS X still call for the way Apple implemented Java in OS X, so even if you have Java 7 installed, you may still be requested to download and install Java SE 6 from Apple. The two runtimes should work just fine simultaneously, but keep in mind that with both installed, only Oracle's Java runtime will be used for Web applets.
Apple's Java update can be downloaded through its Software Update service in the Apple menu, or, for the latest Java runtime, you can visit Oracle's Java Web site.