It's a complete replacement of the iOS binaries and Apple-supplied apps.
I think I pointed this out earlier, but if you look back at the recent WP7 update fiasco where a bunch of Samsung hardware got bricked by the update, you'll understand why a patch might not be a great idea. Esp. given the number of jailbroken iPhones and iPads out there, that don't have the base OS that a patch might expect...