You are correct, the Game VM contains everything to allow the game to run. What it doesn't contain are the system level features like, say, companion app support. Let's say it relies on a System OS (the thing that's running the Kinect and the final audio mixer and a ton of other stuff) feature that only got shipped in a later build, or a new driver feature added to the Core OS VM. Before, MS could guarantee that every console would have the latest version of the OS stack. Now they cannot. So you cannot even send your game to be pressed until you have a final version of the new system image, which puts the developer on a schedule dictated by Microsoft. If MS ships the console update on November 20th, your game will not make Black Friday. In the online version, it would be decoupled, and as long as you shipped even a day after the update, you're fine.Interesting I would have thought one of the advantages of the rather convoluted VM system was that the game would always run with the same version of the OS it shipped with, minimizing the testing requirements for subsequent Game OD releases.
System features would be decoupled as a part of the system OS.
It's one of the things the publishers hated about the 360, having to ship a Dashboard image with their game. MS was trying to remove that issue entirely.