What should I consider regarding housing and visa updates while waiting for my ED visa in Thailand?

I’m assuming by short term housing you mean temporary. If it’s a hotel then they should file a TM30 electronically. Not wanting to make the long term commitment until all your ducks are in a row makes sense. When you find a longer term rental condo etc then often the landlord will file electronically or you’ll have to spend some time down at immigration with all your document “proof”. Sometimes the landlord will accompany you but it can be easy or it can be a hassle. I’d recommend finding some place close to where you’ll studying. No, you don’t need to update your visa application but you do need to notify immigration each time you move and you’re supposed to notify them each time you leave and return to the country but some offices have different requirements and don’t require it if you’re still at the same address. It can be complicated at times.

Why is your passport with immigration?

I'm not sure what you're asking. There's no such thing as "update your visa application each time"