The “Backup” text and icon is being pulled from the .desktop file for the app.
“Backup” has subitems because there are some updates that only “Backup” depends on.
Updates that are not apps but are part of the base system (i.e. “on the CD but no .desktop file”) are under “Ubuntu base”.
For flavors, that should intelligently change to “Xubuntu base” or whatever and use the right metapackage.
Notice that the package name is no longer shown, so make sure your package descriptions are high quality!
Existing Software Updater
New Software Updater