Windows is not necessarily downloading anything when it says "downloading updates"

I've noticed that the phase reported in the Windows Update part of Settings isn't always a great description of what's actually going on. Today I updated a VM that I had sitting around for a while. During the "downloading updates" phase, barely any actual downloading is going on, which is verifiable with the Performance tab of Task Manager. Both the host and the guest reported virtually no network activity of any kind during the majority of that phase.

Instead, there's a lot of hard disk activity going on in the Windows Update service and the System process. Quite a lot of it is just reading, so it's possible there's unpacking or inventory-taking happening instead of downloading.