1. If you are happy with how Ubuntu 16.04 works for you, you get to keep it and you receive support until 2021.
2. With Ubuntu 16.04.2, you get the option to switch to a new path of updated Linux kernels. If you do so, your Linux kernel will get updated every six months, until 2021.
For the first update with Ubuntu 16.04.2, you can enable to get the 4.8 kernel that was used/tested in development version of Ubuntu 16.10.
In the subsequent update with Ubuntu 16.04.3 (around July 2017), you will be updated to that Linux kernel that was used/tested in Ubuntu 17.04 (to be released in April 2017). And so on.
The command to switch you to the new path of updated kernels (updated every six months), is
sudo apt-get install --install-recommends xserver-xorg-hwe-16.04