I think they're using the EFI V8 emulator, which runs stock Apple kernels with zero modifications, and allows you to use Software Update without any mucking about before or afterwards.
You still need kernel extensions for hardware OS X won't recognize (often just modified Apple drivers to recognize different device IDs for sound/ethernet/graphics), but those can be maintained between OS updates, and so aren't affected by OS X updates.
You still need kernel extensions for hardware OS X won't recognize (often just modified Apple drivers to recognize different device IDs for sound/ethernet/graphics), but those can be maintained between OS updates, and so aren't affected by OS X updates.