> it seems insane to me that the whole thing is predicated on the idea that simulated physics is the best way to play a board-game online
I disagree that's the approach of Tabletop Simulator. I mean, yes, it is a physics playground, but it is also much more. It includes some common actions like flipping, shuffling or drawing from a deck of cards. It includes grids to easily align game pieces. And most of all, it includes scripts which actually put some constraints on the "simulated physics" part, automating "maintenance" parts of a game, while also potentially enforcing game rules.