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But an installer talking to the operating system shouldn't need to separate arguments anywhere.

Which is why escape characters and quotations were invented

It is an abject failing of software that perfectly reasonable characters are barred from filenames.

which is why most arguments tend to have a way to be recognized like -, -- or /

Those are how one differentiates flags from arguments, which is a separate problem.

Kind of.

If your flag is for a path, you can assume everything up to the next flag is a path name.

myprog -filename here is my path with spaces -another_flag

Of course this depends on how the shell gives the arguments to the program.

On the other hand, there is no excuse why some GUI programs cannot handle spaces.

cp path1 path2

So, that's just one file?