It's a Nexus. Google makes it very, very easy to work with flashing images. They also post all their OTA updates online, so you can sideload.
What's the difference?
"Images" are full system installs - they require a full wipe of your phone. Any prior version image can be installed because it's a fresh wipe and install, not an update. Images are "flashed" to the device, and the wipe is part of the flash.
"OTA" updates are the files you receive from Google Over The Air. These are updates, not full system images, and so they do not require a full wipe. OTAs are "side loaded" which does not wipe the phone, but you can only install a newer version of Android, not an older one. If you ever want to go back to a previous version, you'll need to flash an image.
Also, Google has not approved the 7.1.1 update for Verizon. That's the reason why you haven't received the update yet. This does not happen often so the update should roll out to Verizon users soon.