As a glasses wearer I was wondering how this works. They mentioned extra lenses that I would have to install into the device. But why isn't it possible to do this all in software?

It takes optical phased array(we’re not there yet at all)) or light-field display(not there in computational power yet) to do this in software. Some googles has diopter correction/focus adjustment dials, but it’s not common for some reason, which I can only make assumptions, perhaps to do with motion sickness.

Because making the lenses movable and adjustable by software is significantly more complex than making them replaceable?

It's not possible because software cannot change the direction of light.