Sure you can't overwrite the executable and you shouldn't overwrite the resource files while the game is running. But take a look at Diablo 2 it already had a patch downloader build into the actually game. When finished the game starts a new process (the Blizzard updater) and quits. The Updater does it's thing and then starts the updated game.
Back to he topic, when using a separate lobby application.
- It can be easier to build complex gui's, tables and so on. You can use a Gui library that you don't want or can't use in the actual game. E.g. Qt but maybe you don't want your whole game based on Qt. Maybe you prefer to use IM gui in the game.
- You can make the lobby application look and feel like every other native application for that OS. Which make it look more like it was developed for that OS. Not some fancy widgets or the look of another operating system. On Windows it looks like Windows, on OS X like OS X and on Linux like Linux (is that even possible with all the different desktop managers?).
- Bad side, if the whole thing is done wrong it feels like some loosely coupled applications that barely work together.
I really like the Gui of the old Unreal Tournament (the really old) where the developers put a whole desktop in the game. Nowadays they have switched too a more console friendly version which is not exactly great to use with mouse and keyboard.
Edit: Something more on the patcher... If you have a small skeleton application that is loading your game as a library, you can unload that library, overwrite it and the load it again. (Beware, I believe unloading is not possible on OS X!)
Edited by shadowomf, 28 December 2012 - 02:31 AM.
Updates and patches are also possible from within the game if the developers aren't too lazy.