once the chm file has been made it is stored in a static form?, if yes is that the reason why it can't be edited online?
Correct. I believe CHM stands for Compiled Help Manual.
I believe there may be ways to hack it but they would be very risky and likely break things. Certainly it would not update the search for a start.
Another point here is that you refer to it being edited online. CHMs will not work from anything other than the user's PC. See CHM Files Not Working on Network.
See Item 33 at Snippets > Miscellaneous for information as to what type of help should be used for different scenarios.
See www.grainge.org for RoboHelp and Authoring information
Hmmm, old man mumbling and scratching at his beard here...
I always thought it was Compiled Help Module. But I could be wrong on that. I think I heard it from John back in 2007.
Personally, I've always explained them as being similar to a "web site in a can". Hermetically sealed off from the world.