I think it's important to understand the distinction between a normal Windows Update and a Windows 10 Feature Update (The 1607 / Anniversary Update is the latter). In the Windows 10 era a Feature Update is a full build of Windows, like installing an upgrade
from Windows 7 to Windows 8 for example), and causes your Windows folder to be renamed Windows.old and then a new Windows folder is created from decompressing the new WIM (Windows Image) file before finally merging your settings, etc. That is why your old
history has been moved.
This is why, since the Windows Vista/7 era, it is no longer necessary to do a "clean" install since essentially every Windows upgrade is now a new installation but with your personal files and folders (and most customisation) is retained and merged back
into the new installation so it appears like an upgrade.
While it is easy to roll out the tin foil conspiracy theories there is a rational explanation for your experience. Steven Sinofsky did a blog post on this new upgrade experience in the Building Windows 7 blog which is still discoverable today. People like
to hate on Vista but actually while the OS was troubled it was the beginning of many technologies that makes Windows 10 as secure and componentised as it is today.
End of history lesson. :)
EDIT: Found the link which is actually about Windows 8 but explains how Windows 7 copied retained files back into the new installation which is different to how Windows XP and before did upgrades:
https://blogs.msdn.microsoft.com/b8/2011/11/21/improving-the-setup-experience/
All you're really explaining is how Microsoft have configured their system so badly, there's no separation between data and executable binaries in how they've structured their file storage. There is no reason why configuration files, log files etc get wiped
out, even though many of these are in the Windows and System32 folders and subfolders, yet event logs and history data need to be erased when the Windows folder gets replaced? If the folder is being renamed and replaced, then like other files that are clearly
copied / merged to the new instance, so can the rest of the important data.
Apart from keeping these important artifacts separate from each other, like *nix systems do, Windows upgrades clearly retain some of the original installation, otherwise, files such as described above would be lost too.
Example: C:\Windows\System32\drivers\etc\hosts
I assume Microsoft keep the renamed folder, because they like a rollback plan that involves bloating the file system with duplicate copies of files and an entire OS folder is too big, not to miss the opportunity to fill the storage space with.
I also don't think your best pitch is to tell me how good Windows 10 is. I've been developing software since DOS 5 and know just how crappy the entire Microsoft line of operating systems have been. Personally, Windows 7 was the best so far, from a user experience
and Windows 10 is just a crappy hybrid of 7 & 8, that I get by with, by installing a custom 'Start' menu