I'm currently rooted and have PureNexus 6.0.1 install on my N5X. If I want to update to N, can I download the OTA file and just sideload it? I've looked at instructions on websites and they don't mention anything about a custom ROM, so I don't know if it is safe.
Of course not. PureNexus is not on N yet.
If you mean the official one, the only way in for you now is back things up and flash it with fastboot. That will also update bootloader, radio and other components to match.