Do you mean is vSphere Update Manager?
If yes, vSphere Update Manager 6.0 is still exist for vSphere environment.
No, I mean did they integrate host patching into the VCenter Server Appliance or does it still require an extra Windows server instance in order to ensure that it remains pointlessly resource intensive.
Seems, there is no other solution.
You can patch your servers by PowerCLI and vCLI easily instead of update manager, as you know.
Weak. If VCenter can check for updates for itself it should certainly be able to check for updates for the hosts it is controlling without requiring dedication of RAM, Processor, Disk, and most expensively, a Windows server license. The current approach is just bad design, and badly implemented.