Does the Xbox One automatically download app/game updates?

Nope

Only system updates are automatically updated

Also game updates require you to click accept their tou usually

Not to mention patch notes

When the xbox is scheduled for the update it will happen automatically. Just remember that the app that you downloaded to the xbox does need to be run to be xbox to get the update.

You need to download the 4K assets. On Xbox One X, 4K updates will download automatically if you’ve told your Xbox to “Keep my games & apps up to date” (in Settings > System > Updates > Games
& apps).

How to Auto Update Games on Xbox One
On the Xbox 360, you could only update a game after launching it from the dashboard, but with the Xbox One there is a way to set it up where where all of your installed games will download updates automatically.
You can even set it up so that game and system updates will download automatically while the system is on standby so that you can jump right into your favorite Xbox games without wasting a second. This can be achieved by enabling a few simple settings on your
Xbox One console.

PLEASE NOTE: If you have a cap on your internet usage, it’s probably best that you don’t enable automatic downloads. This is because some updates can be large in size, and you don’t want to accidentally run
over your internet allowance.

If automatic download options aren’t enabled on your Xbox One, you will have to download system updates and game updates manually. It’s much easier and faster to have the system download them automatically.
In order for the console to do this, a couple of options have to be turned on in the system settings. To get to settings, simply press the Xbox button while on the dashboard. On this menu, scroll to the right to Settings and press A. Then navigate to System
and select Updates. If you select the option that says, “Keep my games and apps up to date.” The box will be ticked, which will make it so that your Xbox One will now automatically download all updates for games and apps. If you also want your console to automatically
download system updates as well, press A on the box that says, “Keep my console up to date.” To automatically download updates while the console is on standby, it will have to be set to the Instant-on mode. To turn this on, go to Settings, then Power
& Startup, and then Power Mode & Startup. In the center of the screen, there is a Power mode option; set this to Instant-on. Instant-on mode will use more power than Energy-saving mode, but it will allow the console to download updates automatically while
not in use and allows the system to startup faster.