this post was submitted on 12 Sep 2023
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That's not how any of it works.
We have had level streaming in Unreal for like a decade. Sure it's more complex to do things this way, but in general the way it works is that when you approach some area (are some distance from a planet or part of a planet) the next chunk of the world loads in, together with any NPCs and logic and everything else - it's basically a self contained map, just seamlessly integrated with other maps. There is no meaningful performance hit if done correctly. You certainly don't simulate everything all the time.
Additionally, all the other games mentioned (NMS, Elite, Star Citizen) also have basically all of the processing on the client side. The servers don't help the clients in any way; they only store primitive states for gameplay purposes, but all the simulation and whatnot is done on the client. And they still manage to be better optimized.
It's more like they really want to use their own engine (for many good reasons) and it'd probably be really hard (if not near impossible without a complete rewrite) to add such a fundamental feature to their existing engine. Even if it wasn't that hard it'd probably still cost a shitton of developer time and they were spending it elsewhere.