When to update noms?/

If you ever hit yes when modifying alignments it'll move everything below it to match changes to the alignment. Most of the time you probably want to hit "no". There are occasions where hitting "Yes" does help if you need to move everything below the alignment to the updated alignment information. 

There is instances where I use the "yes" option as a tool for myself. 

For example, if I need to hit tabs every 90 degrees on the tab features below that is no where near my origin. I will align to the circle, and find the nominal 0, 90, 180, 270 hits on the tabs. Then I will delete the alignment I created to origin to that circle in the middle, and hit YES so that it moves my hits relative to my original alignment origin. It may sound tedious, but it works really well for me, and saves me from trying to figure out math.

I have used "yes" for nominals update if I have created a few location dimensions with similar nominals/tolerances, and forgot to set the tolerances in the dimension window. It'll update them all for me so I don't need to manually edit them all. I usually say no first so I can make sure that it'll be okay. 

Saying "yes" to the Demon is always a risky proposition.
I try to never let it update the nominals as we use move points, and it will happily change every one of them in your program.  Normally make a copy of the program, then delete everything after the alignment, fix the alignment and perform a "code-ectomy" and just paste the after alignment code back in. 

Now that you mention it, I do that as well from time to time. I just don't realize it. I usually hit "no" and always save before I do risky maneuvers like I mentioned above, just in case I screwed up. I have also recalled alignments to keep things from changing downstream if I'm doing changes mid program(bad idea I know) but it has not shot me in the foot yet. Although I have lost lots of progress due to forgetting to save, and when I added a reporting format command PC-DMIS didn't like it and crashed.

I have also been burned by 3D Best fit alignments backtracking and deleting features from it. Not sure what would cause that.

Now that you mention it, I do that as well from time to time. I just don't realize it. I usually hit "no" and always save before I do risky maneuvers like I mentioned above, just in case I screwed up. I have also recalled alignments to keep things from changing downstream if I'm doing changes mid program(bad idea I know) but it has not shot me in the foot yet. Although I have lost lots of progress due to forgetting to save, and when I added a reporting format command PC-DMIS didn't like it and crashed.

I have also been burned by 3D Best fit alignments backtracking and deleting features from it. Not sure what would cause that.