Protection programs quarantine an infection by moving it to a folder where it is disabled and remains inactive so it can't cause harm. In many cases, the file is renamed. It's technically still an infected file, but it is rendered harmless. Many programs also allow you to monitor activity of quarantined files to ensure they stay that way.
I can't really say why this isn't implemented in OS'es. Perhaps they find it to be something that would be too difficult. Also, it might take up too many resources. Another thing to consider is that the people who run these protection programs need to be very dedicated. Viruses are always changing and finding new ways to run undetected, so it's probably best that this matter is taken care of by a third party.
If protection was included like how you describe, I'd imagine that updating would be easier and more convenient. However, I would be concerned with how good the definitions would be. I mean, just take a look at Windows Firewall for XP. It's better than nothing at all, but other programs provide so much more. Microsoft likes to give us the basics and let us add on more if we wish.
I'm going to go ahead and move this to the virus section.
