To add another point to the discussion: a lot (the majority?) of “fake” collision detection isn’t there because of hardware limitations. It’s there by design.

Take a look at 2d platformers. They’re about as computationally simple as you can get. Yet they’re still full of “unrealistic” physics. Coyote time, double jumping, air control, collision boxes that don’t match the sprite, gravity isn’t consistent, you don’t stagger if you slam into the wall or floor, etc, etc. This is on purpose, because realistic does not mean fun. “Realism” is not a magical word that makes games better.

There have been games where, to use your example, your character’s sword bounces off anything it hits, rather than clipping through. The reason most games choose not to do this is because it’s usually pretty annoying. The game’s intended experience is most often to let you play as a badass experienced warrior. The kind of person who doesn’t fumble their blows.

Realism is just another tool in the designer’s toolbox. An example of more “realistic” physics being used deliberately is Shadow of the Colossus. If you swing your sword at a wall, it bounces off, and your character staggers back clumsily. This is because the game is specifically about playing a character who is not a badass, but an inexperienced nobody.