I recently bought a 5th gen iPod Touch second hand. It works great and is in perfect condition other than it will not update. The thing has 9.3.5. When I connect to iTunes it indicated as up to date.
Model # MD717C/A
iTunes 12.5.4.42
IOS 9.3.5 may be the most recent update available for the 5th Gen. I still have mine working nicely on 8.2. And that update I installed with reluctance. (Had an airline app which required it).
I recently bought a 5th gen iPod Touch second hand. It works great and is in perfect condition other than it will not update. The thing has 9.3.5. When I connect to iTunes it indicated as up to date.
Model # MD717C/A
iTunes 12.5.4.42
Like other people have mentioned, iOS 10 only available for the 6th generation iPod touch. You cannot upgrade past 9.3.5 due to the 5th generation's outdated specifications and hardware limitations.
So, if you want to get iOS 10, you'll have to upgrade to the 6th generation iPod touch, or just jump straight to an iPhone such as the 6s or 7.