The first is what happens on the other 90% of the world's computers, including Android system updates. Consider that. The second exists, right now, and it works and it's a lot better than what the rest of the world uses.
What do you mean by 'system'? Android apps update online just
fine. Fedora does not have this distinction betwen apps and core
system: it's just a bunch of packages. I think it is a mistake to
require reboot for _every_ update, even though, as you say, even
user apps sometimes _cannot_ be updated online (*). I am
comfortable with online updates, and I take more drastic
action---restart apps and/or reboot---only when I actually see
(*) because of running processes, or library/API dependencies, or
changes in communication/bus protocols.