There is no best way to upgrade it. It depends on what kind of upgrade you can do. You can interactively upgrade it by loading the CD(ISO).
You can do a command line upgrade or by using the update manager.
Learn about Hyper-V features that increase functionality and usability of Microsoft Windows Server 2016. Also, throughout this eBook, you’ll find some basic PowerShell examples that will help you leverage the scripts in your environments!
Teach the user how to join ESXi hosts to Active Directory domains
Open vSphere Client: Join ESXi host to AD domain: Verify ESXi computer account in AD: Configure permissions for domain user in ESXi: Test domain user login to ESXi host: