It should work like this on devices that use LVM for storage - IIRC (from reading the factory reset script a while ago) there is now a partition that holds the rootfs & initial home partition files in squashfs images.

When you perform a factory reset, the / and home LVs and the underlying VG will be dropped, then a new VG and new LVs for / and home created and formatted with EXT4. Then the rootfs squasfs is mounted and it's content copied to the rootfs lv, same thing for the initial home files.

Looks like this is the script in question, not sure if it still works the same way:
https://github.com/sailfishos/initrd-helpers/blob/master/factory-reset-lvm


In any case, this way you should be able to quite easily update the rootfs and home restore images - just add new squashfs files and delete the old ones (or possibly leave the previous pair, just in case).

Previously with btrfs a btrfs snapshot was used for factory reset - while this might have looked like a nice clean solution, you can't really update such a snapshot over network, especially if all storage is already allocated to the one btrfs instance...