@Porthos I can help shed some light on ISOs vs MCT as well as WIM vs ESD. Plus, if needed I can deep dive in to the Windows Setup process, which is the process that installs Windows including Clean Installs and Upgrade Installs. I personally have a passion for Windows internals and dealing with OS installs, images, and updates. So this is right up my ally so to speak. Windows 10 Media Creation Tool (MCT)
The Windows 10 Media Creation Tool (MCT) is a utility that builds up to date Windows OS installation media (USB, ISO, or a temporary store for an in-place upgrade) on-demand using the Universal Update Platform (UUP) . This installation media can then be used to install the latest version of Windows 10 on your device or another device. It supports clean installs, upgrade installs, or custom installs using DISM.
The overall structure of installation media created by the MCT is exactly the same to what you are used to seeing in traditional Windows OS ISOs and DVDs. In fact, this same structure is still used when Windows Update performs a "Feature Update" which is just a rebranded name for an automated in-place upgrade performed by Windows Update (via the UUP) on a Windows 10 PC. There is one difference though when compared to traditional ISOs, which is that the MCT stores the Windows OS images themselves in an ESD file (install.esd) in the Sources folder of the installation media rather than install.wim like you may be used to seeing. An ESD file (short for Electronic Software Distribution Windows Image File) is simply a more modern version of a WIM file (Windows IMage File) with a higher level of compression. ESDs can be used by DISM and even 7Zip for more advanced installations or extracting images or even individual files. Think of an ESD/WIM as almost a Zip file but built specifically for Windows Imaging (aka Windows OS Installation)
The other major benefit of the MCT is that it will slipstream the latest updates for the latest offical build of Windows 10. This can save you valuable time and ensures you have all the latest updates and fixes that apply to Windows Setup too.
Oh, and one more thing I like to call out that is awesome about the MCT - on top of making up to date OS media, you can select the option to create multi-architecture media. That means a single ISO or USB flash drive with both x64 and x86 versions of Windows. Add the fact that it uses ESDs and that will save some additional space if you like to collect Windows OS installation ISOs like me.
So what does the MCT actually do? From a high level, the MCT does the following:
Dynamically obtains a products.cab file which contains an XML list of the latest UUP and ESD components from Microsoft's UUP servers
Stages a temporary folder to build the installation media and stores a configuration profile based on the settings you provided the MCT (through the GUI or CLI)
Downloads the core OS component packages, applicable base OS ESDs, the latest applicable Servicing Stack Update (SSU), and the latest applicable Cumulative Update (CU).
Creates the installation media (using the same basic structure as an ISO) using the downloaded components. I can dive deeper in to this process if needed.
Outputs the finalized installation media to an ISO, a USB flash drive, or a special local folder if running an in-place upgrade.
If an in-place upgrade/clean install via MCT is being performed, Windows Setup (setup.exe) is started from the temporary installation media store with the applicable automation arguments/CLI options
Windows 10 ISOs
This is the more traditional format of Windows OS installation media many are used to and is what was used to create those fancy Windows DVDs. Still, the basic structure of the ISO is still in use today and will likely never go away. With that being said, there are some major differences with how Microsoft deploys and updates ISOs on top of the difference of how the Windows Installation Images are stored. Let's review...
By default, ISOs from Microsoft are going to use an Install.wim file which is similar in function as a Zip file but is specifically used for installing Windows Images on a device. WIMs have been around since Windows Vista, so they can appear to be easier to utilize, but in today's world you can just as easily interact with ESD files with common tools like DISM and 7Zip. The biggest difference is that they are not as compressed as ESDs, so they take up more space and there are a couple of additional things you can do with them using DISM, but that's a story for another day.
The real difference though is how Microsoft makes and maintains ISOs. Generally speaking, ISOs are only updated with slipstreamed CUs and SSUs when Microsoft deems fit. In many cases, the ISOs are actually .1 or RTM builds. This can be great if you are doing custom WIMs/ESDs that you are personally slipstreaming updates or other customizations to, but for most users, including power users, this just means extra time after installation to install the latest SSU and CU.
Another difference is how to obtain the original ISOs. Generally speaking, Microsoft makes them available via the following channels:
MSDN (Subscription required)
Software Download Site (aka Techbench) - https://www.microsoft.com/en-us/software-download/windows10iso
Note - You'll need to change your browser's device type using Developer Tools (F12) or a Mac/Chromebook/Linux device to access this as it redirects Windows PCs to the Upgrade Assistant/Media Creation Tool
What is the Upgrade Assistant/Update Assistant?
Honestly, its just a stripped down and rebranded version of the Media Creation Tool. Rather than give you the option to create media, it just give you the option to perform an in-place upgrade or clean install. It obtains, stores, and creates the installation media the exact same way as the MCT and then starts an install via Windows Setup (setup.exe). Why a separate tool that does the same basic thing? You're guess is as good as mine. One would have to ask the PM at Microsoft. Hey I Automatically got the latest CU using an ISO or MCT without it - What Gives?
This is normal and expected behavior since Windows 8.1 if you have internet access via a feature known as Dynamic Update. Windows Setup (the actual process that performs the OS install/upgrade - used by the MCT, ISOs, etc.) will by default utilize Dynamic Updates unless you are offline OR use a CLI argument to not use it. Dynamic Update will download the latest SSU and CU then stage them to be installed during OOBE (Out Of Box Experience - near the end of the whole process). If a CU/SSU is not flagged as a Dynamic Update by Microsoft though, then those will be offered up when Windows completes the OOBE and does a check for updates via Windows Update. So yes, you are likely to end up getting the latest OS build when things are all done, but it might take a little longer if the source WIM/ESD was outdated.