Linux (and other Unixes) have been doing live updates to the entire system since .. basically forever; Except for the kernel, there is very rarely a need to restart. And they let you restart the kernel on your own schedule. Windows Kernel developers chose a different set of file system semantics, and that is what makes it hard on Windows.
In fact, if you can't afford the restart even when you schedule it, there's ksplice and a variety of similar solutions that can switch to a new kernel without a restart.
I did have firefox behave weirdly once after an upgrade until I restarted it, around v15 or so -- but I believe even that is no longer an issue; at the very least, I haven't had any issue with upgrading firefox while using it, and restarting it a week later.
That's actually not entirely true. Updates to a shared lib require restarting all running programs that use that lib. Not a full reboot, but probably a service restart or you're not protected by the update.
I think rebooting the entire system to make sure all apps and libraries are reloaded is fine (I do that on linux servers at times if I made a big update and can spare the downtime). Making a user-friendly interface to only restart apps that need restarting sounds complicated.
But whatever windows does is way worse, I dread seeing the "please wait while Windows is configuring your updates" screen. I have an SSD, rebooting Windows takes less than 30 seconds, it's a non issue. But those update installs can take a long time and your computer is completely unusable while that happens.
It's also frustrating when that happens while shutting down because I normally turn off my computer's power outlet when I'm done (it switches off the rest of my equipment) so I have to wait patiently for Windows to allow my computer to shutdown before I can do that.
In fact, if you can't afford the restart even when you schedule it, there's ksplice and a variety of similar solutions that can switch to a new kernel without a restart.
I did have firefox behave weirdly once after an upgrade until I restarted it, around v15 or so -- but I believe even that is no longer an issue; at the very least, I haven't had any issue with upgrading firefox while using it, and restarting it a week later.