They are different. When you enclose something in single quotes, it becomes a string -- this is true of all keywords in SQL, including NULL.

When you use just NULL, it is the SQL keyword, and it is compatible with all types.

So, these are quite different:

Copyinsert into t (col1, col2)
    values ('2021-05-25 11:58:41.000', NULL);

and:

Copyinsert into t (col1, col2)
    values ('2021-05-25 11:58:41.000', 'NULL');

'NULL' is a string and only compatible with a string type. You should get a type-conversion error if the column is not a string.

The one caveat is if you are storing the values in a text file for loading into the database. In such a file, strings may or may not be delimited with single quotes, depending on the structure of the file.

As per the comments, I'm going to assume you're getting mixed up between update and insert.

 USE [DB_A] ;
 UPDATE dbo.address
 SET City = 'test',
     State = 'ing'
 WHERE City IS NULL ;

And

 USE [DB_A] ;
 UPDATE dbo.address
 SET City = NULL,
     State = NULL
 WHERE City = 'test' ;

I think you're there otherwise :-)