It means that ME has all the elements of the driveline simulated in details up to the tires. So all the inertias of components, slipping parts and up to the tire flex etc are accounted for. Those matters have an influence into how the driveline ultimately perform and how it is perceived by the users. That is why you may have noticed in past updates changes in weights and inertia values for example. Their tuning has turned out to be a significant contributor to better physics and in some cases LSD has benefitted by better tuning of those driveline components to provide a crispier behavior. Frankly I don't recall anyone saying so here. If anything users have always pointed to aspects that still are due some improvements and Reiza has always said that things would keep being improved at least until end of 2022. Sounds quite an extreme appraisal of previous conversations to say that physics was declared done and dusted especially considering the amount of physics changes that keep dropping at every update.