theoretically no need for reinstallation? If reinstallation can still practically happen in rolling release, when does that happen?
"Need" for reinstallation has nothing to do with distribution being rolling or "standard" release. Non-rolling distributions (usually) support upgrading to the new version without reinstalling. For example in Fedora you can upgrade to the next release with DNF. So you usually reinstall if you get a new hardware or just break something so badly you need to start over :)
Similarly, does rolling release require less reboots when updating/upgrading the kernel and packages than non-rolling release?
No, this has nothing to do with being rolling or non-rolling, you need to reboot after every kernel update (live kernel patching exists but it isn't widespread). Some distributions recommend rebooting for every update or run package updates in a minimal environment to avoid potential issues (which requires rebooting), but again, this is not a difference between rolling/non-rolling.
what is difference between updating and upgrading?
Update and upgrade is sometimes used interchangeably, sometimes upgrade means upgrading to a new version of the distribution. On Debian based distributions you use apt update to sync the repositories metadata and apt upgrade to get new packages and not actually upgrading to a new release. On Fedora dnf update is alias to dnf upgrade and dnf system-upgrade is used to upgrade to the newer release, so I'd say it depends on context.
Update: Rolling vs. standard release in Linux distributions:
Biggest difference is not about how the system works, but what type of updates is delivered and when. With Fedora (but Ubuntu and other distributions works the same way) you install a specific release (say 34) and you still get updates. You get new kernel, new version of Firefox when Mozilla releases it etc. But you won't get major changes and especially no backward incompatible changes and API changes with libraries. For example python3 package will always be Python 3.9 on Fedora 34 and won't be upgraded to 3.10 and you'll need to upgrade to Fedora 35 if you want to get Python 3.10. But the 3.9 Fedora package will be updated with newer versions (we are current only 3.9.7) with bugfixes and security updates. You can check Fedora 35 changes to get a glimpse of what type of changes you get only by upgrading to a new distribution release, these changes won't be backported to Fedora 34.
With rolling release distributions big changes like Python 3.10 just happen when they are ready without a fixed schedule based on major releases.