Physical Interaction is a connection that two or more objects in the physical world have with each other or will have when close enough to each other. This passing of physical information will cause an effect of visible or non visible nature.
Good physical interaction is caused when enough information is passed between the two objects. This pass of information will cause a change in one or more of the objects.
Interactive examples would be the constant flow of heating information from the CPU to the thermometer of the computer in the motherboard. another one would be the interaction between the a credit card and the card reader to get the transaction information. An interaction that may not be thought of would be pass of information between a touchscreen and whatever is on the screen.
Yes because interactivity is hard to come by because people do not understand what it means and how to get a good interactive basis.