The games is a collection of files (executables, images, texures etc).An installer copies a set of files from the CD to specific locations on the PC. When you run the installer for the update, it adds or/and replaces files in the game location. So you will install for example Rise of nations (the files will be copied to your PC). When you will install an extension like Thrones and Patriots, it will replace/add the files to the current Rise of Nations path.
Hope that this answers your question.
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