Update a nested collection in meteor is not a problem (and it is described here : Updating a nested property on a collection object with $set)
Basic way to do it :
It doesn't work because you can't use dynamic keys for object literals in javascript. You need to use bracket notation and build up the object you want to use in the update. For example:
var city = 'NYC';
var object = {};
object["address." + city] = 'new address';
MyCollectionName.update(idOfObjectToUpdate, {$set: object});
Your last example should work, assuming Collection is actually the name of a collection, and {sel} is the correct selector for what you are trying to do.