They can have up-to-date AOSP but a significant portion of the OS consists of the driver, HALs, non-GKI kernel tree, etc. Android security patch level is meant to cover all of that. They're using it in a way that's not permitted for Android OEMs by redefining it to mean AOSP patch level for the parts of AOSP they build. Some things get built from AOSP for vendor executables and that are built into vendor executables. As an example with firmware, it will use the AVB library in the bootloader firmware. It also gets built into userspace driver libraries which are often proprietary, etc. Updating the portion of the OS they build via AOSP is not quite updating all the code from AOSP, and even if it was, the Android security patch level is not only for AOSP code. It covers firmware, drivers, etc. Check the recent Android Security Bulletins. The split Vendor security patch level shown in Settings is a LineageOS invention to show the REAL patch level for the overall device including firmware, drivers, HALs, kernel, etc. The whole point is meant to be that it's an overall patch level though. We just set the real patch level for extended support devices while providing the AOSP releases/backports. The only problem is the other alternate OSes making it look as if they're providing something more, but we aren't going to stop using it the official way. We're just not going to need extended support after the Pixel 5a since devices moved to 5 years and then 7 years of proper support.
Pixels largely use open source code for the parts specific to Pixels (TEE, secure core, secure element, boot chain) but unfortunately they don't publish all the Pixel specific changes yet. They committed to publishing the firmware and hardware sources for the Titan M but provided no timeline and clearly didn't mean they would publish the sources for the current revisions but rather future ones. There's the OpenTitan project which they seem to use as a base since the Pixel 6 but that isn't what they committed to doing. We're still waiting for this and hoping they do it soon so that we can help audit this and report better bugs when we run into issues.
