While in Sleep, most processes in Windows 10 cease to work and Windows Update is one of them. Some processes have the ability to push the system to wake up, however, downloads is not one of them.

Windows will wake-up the system at a predetermined update time, which is usually 3 am by default, to process the updates.

Thanks to the BITS (Background Intelligence Transfer Service), the Windows Update will resume from the exact point where it paused once the system wakes up.

Does Windows 10 update while in hibernation?
No, Windows will neither update nor wake-up while in hibernation.

Does Windows 10 update after being shut down?
No, neither will Windows update automatically, nor will it restart or wake up after a full shut down.