System update on restart takes to TWRP I guess everyone got notification for downloading update for android 5.0 lollipop on nexus 5. When the download is complete and the phone is restarted, it takes me to TWRP screen and I could not figure out what to do next. How could I update now ?

If I restart according to following screen, it takes me to TWRP.
You need to flash stock recovery to install stock OTAs without computer-based intervention. 

Alternatively, you can download the relevant OTA for your version of KitKat, put it somewhere on your Nexus's internal storage and flash it in TWRP  like you would any other flashable zip. Although you may want to note that xposed doesn't work with Lollipop yet, and rooting is a little bit more involved than it was on kitkat.