The update will not proceed in "sleep" mode. "Sleep" preserves a particular state for a fast restart, but all user processes cease.
If it is going to "sleep" anyway, then if you want certain processes to run, like a download or an update, you need to change your power management settings so that the computer does not sleep.
If plugged in, it may not be sleeping. Power management has a lot of things to work with between fully active and "sleep." It might shut off the display. It might shut off just the backlight for the display, and let all processes continue running. It might shut down unused ports, or put them into a "wait" or "alert" mode.
I set up my Windows 7 machines to never sleep on external power unless I tell them to sleep, something I do manually (or shut them down) because I don't want them fooling around with background processes.
My Mac machines, I let continue running in their own power saving modes, which involve turning off the display backlight and sending a sleep signal to the UPS, but continuing to run system maintenance and hourly backup tasks, in addition to the apps I leave running (mail, messaging, etc).
I became wary of letting Windows laptops run overnight,n after living in Beijing, where a very long power outage one night let the machine draw on the lithium ion battery long enough to destroy it. It then became my habit to manually shut down my laptops when not in use (sleep still uses power), and put desktop/deskside machines on a UPS, since they are often running some task that takes all cores overnight, or longer, to complete.
There is a lot of flexibility in Windows power management for laptops, particularly if you are plugged in and need not depend on battery life. What seems to be lacking are modes for "complete this task then go to sleep (or shut down)" or "sleep until this needs to be run." But if you have something that needs to be finished unattended, there is definitely a "keep running" mode, which will work until the power goes out and the battery runs down.