Each cell in the EEPROM is good for 100,000 writes (guaranteed). As I said, reads are unlimited. If you use the update() function to write new values to EEPROM, the value will be written only if the value to be written is different than the value already in the EEPROM. This prevents unnecessary writes.
In the circumstance where a write fails due to this limit, does it affect the entire EEPROM or just that memory address?
Only the cell that is "worn out" is affected.