System Update Downloaded
I had the same problem on my Nexus 7 (2012) on 4.4.4.

Do you have multiple user accounts on your tablet? If so, have you tried installing the update from the other account(s)?

I have two accounts, and when the 5.0.2 update got pushed to my device, both accounts got the notification. However, one of them had the same symptoms you described -- nothing happened when I pressed the notification, and the settings app didn't say anything about the update. From the other account, the update worked.

Strangely, the account that worked was not the one I created when I setup the tablet.