It doesn't, I have installed many Windows updates that didn't require a reboot. Even ones I expected to need an update, like an update to a graphics driver. Screen just went blank, then came back a second later.
AFAICT it's only updates to things that run at startup time that require a reboot, probably because NTFS doesn't allow you to write to a file that's currently opened (as opposed to nearly every Linux filesystem, which handles that just fine: the process that has the file opened continues to see the "old" file, while any that open it after the write will see the "new" file — but NTFS, probably due to internal architecture, can't handle that and so you have to reboot to change files that background services are using).
AFAICT it's only updates to things that run at startup time that require a reboot, probably because NTFS doesn't allow you to write to a file that's currently opened (as opposed to nearly every Linux filesystem, which handles that just fine: the process that has the file opened continues to see the "old" file, while any that open it after the write will see the "new" file — but NTFS, probably due to internal architecture, can't handle that and so you have to reboot to change files that background services are using).