Android is not a modular OS by default, but according to Googler Romain Guy, a core system component, in this case the graphics drivers, can be updated via the Play Store in the final version of Android O. According to Guy, he and his team managed to get the functionality up and running in testing, and it should be ready for select devices by the time Android O gets a name and drops in its final form. The feature will require OEMs and driver vendors to work together on making the updates modular, but should make things easier for developers, users, and device makers alike once properly set up. Users won't have to download and flash a system update just to get a new graphics driver, developers can access an isolated form of the latest drivers for troubleshooting without having to dive into system software, and OEMs don't have to build updates and get them approved by vendors and potentially carriers before pushing them out.
Guy and his team didn't confirm it, but this bit sounds like it may be related to Project Treble, an upcoming change to Android that allows system file modularity, which essentially means that entire device firmwares could be updated piecemeal in this manner. Essentially, the very core Android code is packed together in a way that allows for high compatibility, which will mean that device makers and developers don't need to compile a fresh copy of Android with their changes built in for each update or custom ROM or kernel; under Project Treble, they need only load up the base Android core, and plug their code into it.
Another implication of this development in particular is that Vulkan support could become more widespread. Owners of many an older or offbeat device are still pushing for the relatively new graphics framework to come to their device. It's highly compatible with current hardware and software, and has been shown to blow OpenGL ES out of the water quite decisively in testing, which highlights its potential to bring higher-end graphical experiences to a wide variety of devices all over the range.