>does not indicate that a system understands the physical world.

That's a bit like saying the chatbots aren't actually intelligent. Sure, but there is at least a plausible illusion of it & even that has usefulness.

The same applies to physical world. e.g. Look at the reflections in the SORA demo. They're not right, but they're also not entirely wrong either. That to me suggests usefulness in approximating the physical world