Windows Servicing Stack is what allows Windows to install, update and repair itself by using the component store (WinSxS). When you install an update (MSU, CAB), the Servicing Stack through DISM does all the work. UWP apps (MSIX, Appx) are also deployed using the stack.
Windows Update is a higher level service sitting on top of the Servicing Stack. Store can browse, download and install apps separately from WU.
For convenience, WU will update installed Store apps for you instead of having you enter the Store to update them. This feature can be disabled by registry if you don't want app versions to be replaced (keep older builds).