Currently VMM 1807 does not support using a Fabric defined WSUS Update server for updating nodes of a S2D Hyper-converged infrastructure cluster; in fact there within Microsoft VMM documentation there is a "Note" that explicitly states the following:
“..Note that you cannot update servers part of a Storage Spaces Direct cluster (either hyper-converged or disaggregated) using VMM and trying to patch these using VMM may cause data loss.”

Yes, MAY CAUSE DATA LOSS!!

First idea is that this should not be a mere Note, it should be flagged as a WARNING-DATA LOSS IS POSSIBLE.

Second, how does the VMM group consider managing the update compliance status of these servers? If VMM is THE Microsoft virtualization host management solution and we are to use it as such, how is it that we cannot use the Fabric defined WSUS? Is there a "recommended practice" ?

Afraid to hear that an additional WSUS would be the answer; Current guidelines call out a Configuration Manager WSUS for VM's, and a VMM Fabric WSUS for Hosts. So if yet another is required...