The Google Play Store uses a technique called delta patching to calculate the diff server side and avoid transferring parts of the app that haven’t changed since your original installation.

This is understandably not perfect because they want to avoid load on their servers and also the extra processing on your device to “unpack” it. So what you have is a happy medium between sending the entire app again and sending strictly the diff.

Because you're literally re-downloading the entire app, tossing the old version, and installing the new.

It's not modifying existing files with the changes, it's just replacing the package completely (while keeping config/user files).

Those user files/configs make up the missing data between new+old.

This will completely depend on how and what is being distributed.

For example, I used to work on an app where assets (3D models, images, etc) were appropriately diff’d during updates but the binaries were not.

The reason they’re smaller is that they’re compressed, and expanded during the install process.

For most platforms, the product update is vetted and signed as a functional program, then compressed to save space in transmission, then decompressed and validated prior to swapping with the original.

OS updates and DLCs are available to add new data to an existing system, but this isn’t generally used for discrete parts of a functional program due to the potential for abuse or errors.