It might still update some things behind the scenes.
Still
the update and ideas behind things
With the kinect update a new protection method now known as AP2.5 was introduced/activated. This was unlike any other protection before it (beyond the initial protections anyway) in that it stopped games from being played if it was tripped rather than tried to detect things for banning purposes.
Thus far only 6 games* and their region dupes have it (3 in the initial release, 3 more in the second kinect dash). AP2.5 has been covered extensively elsewhere though so I will not dwell on it for too long (short version samsung and some hitachi drives were immune, all the others which constitute most drives were not and there is no viable way to swap drives to bypass it).
*Fable 3 (this was the odd one out in that it came out with a pre kinect dash and can be played without issue on those).
Assassin's Creed Brotherhood
Need for Speed: Hot pursuit
Second kinect dash added
Halo reach
COD Black ops
COD Modern Warfare 2
MS however screwed up (or did not depending on how you might feel about their marketing/projections) and left some of the last beta dashboards of the kinect betas without ap2.5 but still able to play the latest games (at the time) so you could update to one of the compatible betas and play ap2.5 laden games along with the latest and greatest without either having to have one of the earlier drive models without it, a compatible hacked firmware or a JTAG system. This dropped the abililty to play on live but if you were banned it did not really matter.
There was however another proper revision of the kinect dash after the first and this one definitely carries support for ap2.5 .
Games also carry updates on disc although it usually takes a few months for things to catch up (sometimes less, sometimes more).
In the past there was some trouble with these updates appearing as bad discs to the hacked firmwares (which at the time had a measure of protection). Each change to these update sections became known as a wave (at present we are on 11 but do not read too much into the actual numbers).
http://abgx360.net/verified.php lists what wave a game is. Changing the wave of a disc (a very silly thing to do if you want to avoid being banned) is known as wave patching.
We are now just starting to see games carry and use/require this latest kinect dash or newer (dragon age 2 being an example of this) at least on non JTAG systems which is what caused this newest round of troubles.
JTAG and these updates.
I know this is not what you asked but I am going to cover it as the issue is twofold and you might have seen some JTAG related discussion on it.
AP2.5 is able to be removed with hacks to the system as well so that was not an issue, this is an dashboard versioning issue that hit at the same time (same cause - different issues).
Nearly all JTAG consoles (certainly the ones that play recent games) use a rebooter to appear to use the latest dash at the time. Each new dash that comes out has to be hacked (sometimes completely new hacks but other times just ports of existing hacks).
At present though the main go to dash with the abilities desired is based on the first kinect dash (the second one now has a rebooter version but it has very serious limitations like not being able to use the program dashlaunch which is not good as dashlaunch is almost mandatory for all the nice things JTAG machines can do beyond just running games and homebrew) so workarounds were needed.
The way most JTAG users do it is to wave patch their game or remove the update section of the game from the iso when extracting or converting it then patch the version checks in the game (either manually, with a 360 side program or use dashlaunch (newer versions added the ability- there is nothing wrong with the newest so grab that) to patch the dash to remove the version checks).
Regular hacked DVD drive owners-
AP2.5 was counteracted by an update to the hacked firmware. This is where it gets a bit complex
After the last banning wave in 2009 came a totally redone hacked firmware known as "LT", it did however come at the cost of needing all games to use a method known as splitvid (short version- DVD video sections on each layer not simply assumed to be redirected but actually there). A simple thing to do but as many had a huge legacy collection of games (the method has been around for quite a while but not all games would have used it) and you can not reburn a burned disc....
For banned people this was no issue- they carried on as before (a hacked version of the old ixtreme 1.6 line appeared known as 1.6NS which was wonderful and had no protections at all (no future wave issues) and if AP2.5 had not appeared would have been deemed future proof for those with offline or banned consoles).
LT appeared before ap2.5 and was caught out by ap2.5 . A newer version called LT+ appeared but along with it you also needed to patch the games that have ap 2.5 to use the newest security emulation known as SSv3 (see part a couple of lines back about not being able to reburn a burned disc but that is less troubling).
It seems more than a few people opted to use the kinect beta workaround (links elsewhere but in general you bodged a kinect beta install and wave patched your games to avoid updates taking you past the beta) and as the newer games require a new version of the dashboard far beyond the kinect beta which has AP2.5 and will refuse to run unless you are at the version it wants you need to update to play them and that is why you lose the ability to play those 6 games mentioned earlier (presumably a few more at some point as well- we just saw the newest need for speed game earlier today).
