An application runs in background on your console and from time to time it connects to a Microsoft server and says “are there any new updates since this date? ” And the remote server replies, ‘yes, there’s version x.y.z of the operating system, you can download the modified files from this location”
It does the same for every game you have installed, depending on your settings. It can check for a specific game before or after you exit the game or a service on a Microsoft server can prepare a list of updates for every console by looking at what the player bought and installed and sends the prepared list to your console.when the console.asks for it.
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