Hi Mike,
I tested in my lab and got the same result with you, windows server 2016 shows as win10, as far as I'm concerned, this is due to WSUS server 2012 R2 haven't recognize server 2016, while other functions are well.

If it doesn't effect the normal updates deliver, then, we may ignore it.
Besides, it's also recommended to install KB3159706(with manual steps) on the WSUS server to upgrade your WSUS server to the latest version.
Best Regards,
Anne
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