So after much flailing, I think I understand how to manage updates... but I'm not sure. I currently have root and Xposed installed on 5.1.1.

My plan when the next update comes:
1. get the factory image from google
Unzip the zip.
Inside that, there is the image-shamu zip, which I'll also unzip.

fastboot flash boot boot.img
fastboot flash system system.img
fastboot flash recovery twrp-xxx-shamu.img

from twrp
Reroot and reboot
boot back to recovery and install Xposed again.

Is that about right? what am I missing here?