After doing some research, I've been seeing reports that MM2 is more or less a updated version of MM1, is this actually true?

Can only be considered true if you only talk about the game engine. The combat system and travelling are quite the same.
MM2 is much bigger, has more graphics, more monsters, more items, more and slightly changed classes, more levels, more spells, automap, hirelings, ...

You can import your MM1 party into MM2 and you'll see some game engine similarities, but they are different games. They have different stories, quests, worlds to explore, ... .

Pretty much what Kmonster said.

MM2 has a completely different story and maps. It uses the same engine as MM1 with a couple updates.

A good comparison would be MM6 and MM7,MM8. They all use the same engine but all have far different stories and maps.

If you want the full MM experience you gotta play both MM1 and MM2. If you are thinking about skipping MM1 and just playing MM2 since MM1 looks alittle too dated, give it a chance. It will be a good preparation for playing MM2 too since they work similarly.

As others have mentioned, MM2 is a completely new game, but it uses similar exploration mechanics and a nearly identical combat system. Your characters' stats and such also use the same system, allowing you to import characters from MM1 to MM2.

You can think of it as MM2 using the same "engine" as MM1, with a lot of updates. Kind of like how Baldur's Gate 2 uses the same engine as Baldur's Gate 1, but is still a completely new and improved game.

It's very similar, but overworld exploration is much, much better in M&M2 because it's laid out more like wilderness (M&M1 essentially treats it like a dungeon with trees for walls).

This is true... but sometimes it makes it harder to explore the overworld in MM2, because you'll only find certain things if you happen to be facing in the right direction. in MM1, the "walls" would guide you to these locations but in MM2 you have to be careful that you don't miss them when exploring. They are often still marked by trees and mountains though, to give you an idea of where to look.

True, 2 did have issues of its own, but overall I thought it was a big step in the right direction and definitely set up what we eventually got for III/WoX.

Don't forget Auto-Mapping

It has updated graphics for sure, but it looks to be a completely different game judging by the starting area. I haven't played through it yet though. I'm still on MM1.

There are definitely some differences, but MM1 and MM2 are much more similar to each other than they are to any of the other games in the series. For example, the combat system in MM1 and MM2 is virtually identical, except for some new spells and new weapons and armor you get in MM2. It's very much a logical progression from MM1.

MM3, on the other hand, really is quite different because the combat system was completely revamped, and actually takes place while exploring the map rather than on a separate screen. MM4 and 5 followed that formula, and then with MM6 the games moved to true 3D and real-time-with-pause combat, another big design shift.