I have a working Pi Desktop w/RPi3 fully working. When I try to software reboot the system powers down rather than reboot. I have installed the latest Pi Desktop package (1.1).
So either sudo reboot or systemctl reboot both power down the system rather than reboot. Since this would normally work with any Raspbian release, I suppose that it has something to do with the Pi Desktop case.
I saw that the Pi Desktop software package has a symlink in /etc/systemd/system/reboot.target.wants to /lib/systemd/system/embest.service. Under the assumption that the embest.service was the problem, I removed the symlink, performed a systemctl daemon-reload, and was able to reboot properly using software command -- but only once. It never worked a 2nd time.