Erlang has built-in support for hot code swapping, which allows code upgrades and rollbacks to be performed dynamically without interrupting the running system. Here's an overview of how Erlang handles code upgrade and code rollback:

* Module-Based Code Loading : In Erlang, code is organized into modules, and each module corresponds to a file with a `.erl` extension. When an Erlang system starts, it loads the necessary modules into memory.

* Code Replacement : To perform a code upgrade, a new version of a module is compiled and loaded into the system while the system is still running. The new version of the module must have the same name as the old version. This allows processes to continue running with the old code until they explicitly switch to the new version.

* Code Server : Erlang uses a code server to manage code loading, upgrading, and swapping. The code server keeps track of the loaded modules and their versions. It ensures that processes continue to use the old code until the new code is explicitly activated.

* Code Path and Versioning : Erlang maintains a search path for locating modules. By default, the search path includes the current working directory and the directories specified in the `code` module. When a process requests a module, Erlang searches the path to locate the appropriate version of the module.
* Module Versions and Code Change Handling : Erlang assigns version numbers to modules, allowing multiple versions of a module to coexist. When a process requests a module, Erlang ensures that it receives the correct version based on the requested version number or the default version.

* Hot Code Swapping : Hot code swapping refers to the process of replacing the old code with the new code while the system is running. This is achieved by atomically swapping the module references in the process memory, allowing processes to seamlessly transition to the new code. Once a process switches to the new code, all subsequent invocations of the module will use the updated version.

* Compatibility and Validation : To perform a successful hot code upgrade, the new code version must be backward compatible with the existing code. This means that the new code should be able to handle messages and data structures from the old code version. Erlang provides mechanisms such as callbacks, behavior modules, and version checking to ensure compatibility during code upgrades.

* Code Rollback : In case of errors or issues with the new code version, Erlang supports code rollback. This involves reverting to the previous version of the module, allowing processes to continue running with the older code. Rollback can be triggered manually or automatically if an error occurs during the upgrade process.