Just about everyone else does delta-patches (only download modified parts)
You'd just have to only download actual changes, so likely binaries only, ie. few megabytes.
This is on a per game basis. I still have problems with Total Warhammer on Steam running its updates because it wants an obscene amount of empty space on my SSD. Most Forza updates have been small in size for me, basically the new content. I'm not sure if they actually do delta-patches or they were just smart with their file setup.
But I don't think that matters here. The issue is that Microsoft put a totally different game up on the store. (When it started downloading on my PC -- I noticed because suddenly my SSD was full -- all of these files were in a totally different directory, with my old Forza game folder untouched.) I don't see how Steam, Origin, etc. protect from a developer mistake like this.
We should hold the developers and publisher responsible for this, it's an embarrassing screw-up, but best I can tell there's nothing uniquely Windows Store about it.
Most competent gaming services can apply rollbacks on updates / apply older updates back. If the Store can't do this and the recommended way is to uninstall and re-install the whole game, that's just not good service and can just as well be considered another Windows Store disaster. Releasing wrong patch is something that happens every now and then but it shouldn't be a big issue to fix that.
Unfortunate how their efforts for PC gaming are being crippled again and again. Rise of the Tomb Raider released a year ago and while they have added some nice features to Windows Store/UWP since (still no proper wheel support though! only specific wheels supported which isn't good enough), the platform is still struggling even with core services, the most basic features you should have.
Again, I'm not convinced this is 95% the same game as the default version (where what you're saying would make sense). The files were unencrypted, something not true of the release version. This isn't just a wrong patch -- otherwise it would have been a few gigs like previous updates -- this is an entirely wrong game.