The background downloading feature of Newsstand is interestingly handled by push notifications. That is, when new content is ready, the developer can, once a day, send a push notification to your device with special data, and your iDevice will then (if it’s ready to do so, battery and connection-wise) start downloading new content in the background.
The ability to only update once per day is a curious decision, as it seems publishers will not be able to automatically update their pubs to reflect breaking news or publish corrections as they currently can via a website or dedicated app.
This isn't a huge deal for weekly or monthly print publications which are used to having deadlines before closing the book on an edition. But for daily newspapers, who are getting into the habit of updating a newspaper webpage dozens of times a day, it may present some difficulties. Oddly, digital technologies like the iPad have pushed publications towards an "up-to-the-minute" news cycle, but Newsstand seems to be going back to a more traditional "once-a-day" publishing model.
As with all Apple's content efforts, getting publishers on board isn't going as smoothly as the company would hope. Eight French publications are banding together to negotiate with Apple regarding Newsstand access, with concerns over the 30% cut in revenue that Apple traditionally takes, and access to customer data.
Update: Some readers on Twitter have cleared up the situation slightly. @Xonder notes that "Newsstand apps can only update once a day __In the background__. Once the app is launched, it can update all the time."
@BenjaminZAMayo says users will be notified of important updates and breaking news "as they do at the moment - [with] push notifications," but without automatic downloads.