Why does updating the description of a custom block not update the block title?
There isn't really a reason, that's just how it works, the title of the block_content entity is an internal administrative title and while used as a suggestion for the initial block title, will then afterwards no longer have any effect on that.

You can place the same content block multiple times with different block titles.

While you think it's a bug, someone else might rely on it, it's not something that can be changed now, not by default anyway.