I connect to my Linux host and after getting to the desktop it asks for a password to activate the automated background update process. Then it asks for a password if I pop a disc in to the host, then it asks for a password if I tell it to reboot, and so on.
If i log in to the host directly on its own keyboard/screen, none of this happens, only when I connect remotely.
Is there a config/setting I messed up during installation?
It normally makes sense to require a password for priviliged operations (updates, reboot, etc) on a multi-user system. Polkit is configurable though, so you should be able to change this behaviour if you want. There is an example for color-manager in the post linked above, but if you manage to come up with any other useful Polkit rules then please feel free to post them in the comments there.