I have recently noticed that the latest version of Ubuntu does not come with the latest stable Linux kernel version.
For example, Kubuntu 16.04 LTS comes with Kernel 4.4.0-21-generic while the latest stable kernel version is 4.5.2.
There is surely a strong reason why they don't ship the OS with the latest stable kernel which is something I would like to learn about.
I would also like to know if updating the kernel to its latest stable edition is a bad idea or not.
Like Ubuntu, the Linux kernel also has long-term support versions. So, for an Ubuntu LTS release (like 16.04), picking the latest long-term kernel version makes sense. This way, unlike with a normal stable release, Canonical can rely on the kernel maintainers to backport fixes for a long time. 4.4 will be supported till February 2018.
Canonical did pick a normal stable version, 3.13, for Ubuntu 14.04. This was considered a mistake. The Ubuntu community and Canonical devs had to pick up maintenance of the 3.13 kernel the same month that 14.04 released. On the other hand, 3.12 would have been supported by the kernel team until next year.