It’s better in one way, in that updates are applied on reboot rather than pulling the rug put from under running applications. But I agree that it doesn’t go all the way, as it doesn’t provide a verifiable base system with clearly separated modifications. OSTree would be great.
Another possibility would be to distribute a base image as a btrfs send stream (possibly differential against previous versions) containing a compose-fs image and associated files. And then OS extensions could be installed with systemd-sysext.
Only if you know it exists. It’s not something that comes up when searching for it.