As per the documentation pod repo update updates the spec repos located at ~/.cocoapods/repos in your home folder.
Updates the local clone of the spec-repo NAME. If NAME is omitted this
will update all spec-repos in ~/.cocoapods/repos.
The repo is basically a list of all pods and versions available. I have just encountered an error in our CI builds because the repo did not include a spec for a library I have just added. By running pod repo update it now knows of this newer version and can continue to install it.
So to answer your question.. Running pod repo update in your documents folder will not do anything in that folder. It will update its pod spec references in your ~/.cocoapods/repos folder only.