Cleans the largest majority of it including the biggest part the actual executable files. The files in the Application Support most times tiny little text files and they take next to no space at all. Your example used to illustrate your point is useless as you were just to lazy to clean out actual applications that were installed in effort to gain back the space. Something like AppCleaner will delete the applications and the support files of the apps selected for deletion.
That could be said for many small apps, but if you've used Xcode for a while, you will know that it likes to place a lot of files under ~/Library. Dragging the Xcode app to the trash is not going to clean this up. With iOS and Apple Watch development, I had about 30GB of data under ~/Library/Developer/
Also there could be situations where the system will not operate correctly if there are incompatible settings remaining after the update. There have been reports of high CPU and rapid battery drain when upgrading Macs.
And if it isn't a problem, why do apps like the one you've described, and "clean my mac" are very popular? It is because the can uninstall the application and clean up the leftovers. It is the leftovers that can eventually fill your drive (and with 128GB, space is not a commodity).
Finally there's nothing quite like the smell of a fresh system.