In the customer example that you give, the CustomerModel contains all the information that is stored by your database (or other backend). The CustomerViewModel contains similar information if it's going to be shown on the UI (Name etc., potentially 50 other properties if you have a large class) but as uses the INotifyPropertyChanged interface to show them as properties that the View (i.e. the XAML) can bind to.
e.g.
public int Name
{
get
{
return this.name;
}
set
{
if (this.name!= value)
{
this.name= value;
this.OnPropertyChanged("Name");
}
}
}
The ViewModel also contains other bits of UI state - Visibility flags, current Tab index, more complex bits of text built out of data in several fields, ObservableCollection<> of child items, etc. All are there to be bound to the XAML.
I have seen the ViewModel created from the Model as a one-time, one-way process, e.g. with a constructor:
CustomerViewModel viewModel = new CustomerViewModel(customer);
or as an extension method
CustomerViewModel viewModel = customer.ToViewModel();
I haven't seen any provision for updating a ViewModel for changes to the Model - the point of the ViewModel is that it's isolated from the model. It keeps a separate copy of the data. It does not propagate changes back to the model, not until you press a "save" button. So if you cancel instead, nothing in the model has changed and there's nothing to undo.
You may be trying too hard to keep the ViewModel up to date with the Model - most cases like save or load you can just throw away the current ViewModel and make a new one from the current state of the model. Do you need to keep the ViewModel's UI state and change the data in it? It's not a common requirement but it could be done with a method or two called when the save or load happens.
So there's also the assumption that this wire-up logic happens somewhere. This is why most patterns that involve views also involve controllers that are responsible for acting on commands (e.g. show a customer, save a customer) and setting up new UI state afterwards.