Condition Rating is usually updated every week, assuming you're in the middle of a football season. When you load myClub, you will see the game's top players' condition right away.
If your players had a good week in real life, they will witness a “Form upgrade” in PES myClub as well. Form has 5 variants: A/B/C/D/E. A player who scores a hat-trick is pretty much guaranteed to be in A-form for that week.
This means he will be very likely to have the arrow up for pretty match every game, every time you select him.
It is unknown how much attributes are improved, since Konami hasn't mentioned this since the PES 6 guide book, back in 2006, but you can have a look at this chart for PES 2018 to have an idea of what to expect, provided they haven't changed it over the years.
In any event, one thing's for sure: this simply means your players should perform better than usual.
If a player is injured in real life, he will likely be in C-form for that period (and sometimes in D-form the week after the match they got injured). If you notice your player is in D-form, you should avoid playing with him, as he’s likely to have his arrow down for most games, resulting in poor performances.
C-form is the default state, and the one most players will usually be in. If the competitions are paused, C-form will be applied to all players. Legends are always in this state.
You should also keep an eye on the “Form” attribute of each player, which is independent from what I mentioned above. You can either see this when checking your player’s stats, or by accessing PES DB.
These values range from 1 to 8. The higher the number, the more consistent they are - Messi and Ronaldo, who consistently perform well throughout the year, have 7, while a generic White Ball can have 3.
It's important to note that consistency does not necessarily mean "better"; what this means is that a 5 form player might get more blue arrows on a C, but also more red arrows. In short, inconsistent players are more unpredictable.
The calculation Konami performs is unknown, but if a player has a high form number and is in A-form, you can pretty much bet he will perform with the arrow up almost every game.
If you have many quality players in your squad, you should use as many A-form players as possible. This also adds a bit of variety to the teams you will face every week.
If every player is in C-form that week, you should go for versatile players that have a high "Form" attribute value, as they should display "normal" arrows often.