What happens when a MS update reboots my machine?

It just normally updates system files and may add new utils so it doesn't effect most things

Occasionally my machine reboots, I assume in response to a monthly MS update.

You really need to check this.
Your Update History lists updates and dates so you can compare with that.

Your Event viewer can tell you when unexpected shutdowns or restarts occurred.

If restarts are happening unexpectedly, could well be hardware.

Take control of update-related restarts- Tutorials available- see the searchable Tutorials section.

But I'm always surprised that all my files that were left open the previous evening are still there and still open. How is that possible? What is happening here?

More likely that it hibernated or went into sleep mode.

Otherwise consider
How to Save and Restore Your Windows Session

needsleep said:

Version 22H2 (build 19045.3930)

Occasionally my machine reboots, I assume in response to a monthly MS update.
I'm greeted the next morning with a sign in screen.

But I'm always surprised that all my files that were left open the previous evening are still there and still open. How is that possible? What is happening here?

Thanks,

Your PC will only reboot after a monthly update when you give your consent at which point you should close all open files to ensure no problems.

Pretty much any/all change to the Operating System writes/rewrites entries in the Registry which is made up of 5 text files called Hives and required by Windows in knowing how to run things. Problems in the Registry can cause major issues and can lead to reinstalling Windows. Each User set in Windows has their own Profile and in turn their own entries in the Registry or own version of the Registry.