The basic problem with updating any disk file is that since it is fundamentally a sequential device (processes things in a serial order), you cannot just modify something in the middle of a single file.

Technically, that isn't true. There are file systems that provide record based files. And you may see DBfiles and database as record based files as well. Now, when you're talking about plain text files on most Unix and Windows based OSses, your claim is true. But that doesn't make it true for every file.