You have things like arch and gentoo which are rolling distros.
Debian is a semi-rolling distro if you set it to track the “testing“ repository. Also if you set it to track “stable” instead of the code-name for the current stable release, when a new version of stable is released, your entire system will be updated from the new stable branch.
And many point release distros offer an upgrade path from one point release to another. For example with Ubuntu it’s possible to update from one LTS version to another. Upgrades from non-LTS versions are not always possible.
So in many cases, whether a distro is rolling, or not -the point releases of their installation media are for first time installations.
Once you have a particular distro installed, it’s often possible to update to a newer release.
Some distros might require a complete installation from scratch using the new point release, but I think distros like that are in a minority nowadays.
With the point release distros, the focus is on having a stable and secure desktop experience for users using a sane set of software and a sane default configuration. So it’s not always appropriate to have the very newest versions of packages installed.
They’ll use older, better tested packages.
With rolling distros - the focus is on having the latest and greatest, most up to date packages installed. But that can be a double edged sword, because you potentially also have the latest and greatest bugs, vulnerabilities and performance regressions. So it can have an effect on the stability and security of your system sometimes.
It might not happen often, but it does happen from time to time. And sometimes it takes a while before the most serious issues are fixed.
There are a few philosophies about this.
Some distro's such as Ubuntu, Fedora, OpenSuSE have what is calling rolling updates.
I have some Fedora systems that I haven't re-installed from scratch in several years.
But I can keep updating them to the next version of Fedora (currently release 33).
These distro's try to keep up with the latest versions of everything. It takes a lot people
testing, compiling, building, and releasing thousands of packages to do this.
Fedora, Ubuntu, and OpenSuSE have hundreds (thousands?) of people who do this
constantly. There are new packages released almost every day.
Next you have LTS distro's. These also do updates from time to time, but not nearly as often.
The rolling update distro's will update kernel versions. In some cases every week or two.
The LTS versions never get a newer kernel, however they frequently patches and security fixes
for the kernel they came with. This is how most enterprise Linux's work. Usually these
have older kernel that have been around for a long time (at least a couple of years) and tend
to only do bug fixes and security patches. These distro's only get new packages every
few weeks or so. However they are generally very stable. These Linux distro's are what "runs the internet" for the most part.
Then you have smaller Linux distro's that only have a few dozen people supporting them.
Sometimes they only get updates once or twice year. It seems many of these will release
dozens of packages at the same time.
Finally you have static or "immutable" Linux releases. These never get updated.
These are usually used for IOT or embedded Linux. Your television or refrigerator might run
this kind of Linux.
There are some distro's such as buildroot and Linux From Scratch, that you yourself have to build
and compile packages for. You can update them as often as you like. This can get old and tedious after a while.
It's simple. Periodic bug releases, with intervening security updates. Bug releases define the "point" release, and security fixes take care of business.
And one more point, it's up to the distro to define when the configuration of bug releases and security fixes is significant enough to warrant a point release designation, which makes a convenient recovery/reload point, or even a logical entry point for a new install.
In Kubuntu LTS releases, the first bug release (i.e., 20.04.1) comes after about 3 months, and then again about every 6 months - more or less - depending on how bugs reveal themselves and are fixed. Arch, and other distros define this for themselves, as it makes sense to their development and support model.