Why app updates download entire app instead of only "updates"?
As far as I know it does download just the updates (referred to as the "delta") on Jellybean 4.1 and above. Obviously the initial install is the full app but updates only download the data that has changed from the current installed version (i.e. the "delta" of it).
You won't see anything different when updating most app, it will still look like it's downloading the full app but on some larger apps you will see if 'jump' parts of the download which indicates that it is just getting the delta.

Engadget and AndroidCentral both have articles indicating that the Play store does provide delta updates