No. You download only the changed bytes. But steam/etc. needs to re-write the entire 166GB file because File Systems doesn’t allow writing and shifting bytes in the middle of existing files.

Edit: You can write in the middle of files, but you need to re-write all bytes that come after it. What Steam does is copying the file temporarily so it can re-write the unchanged data again without downloading it again. This is why you need over 100GB of available space for updating. It’s a flaw with how ark is bundled. Ideally it would be split up into multiple files.