And why is it we can continually run into walls without physics stopping us?

Not exactly limited to MMOs. Perfectly recreating physics and physiology is an absurd ask. The character animations are designed independently of surfaces; the game simply recognizes that player inputs are translated to specific animations, the avatar is merely a visual representation of some digital dot that is what the game sees as our character, and surfaces only exist as far as the devs program them.

If you think rocks are bad, the game (most games) can't even do simple shallow ramps right. If you look close, toes clip into the ground, while heels float in the air (while walking up a ramp). Stairs look even worse, since the game simply registers it as a ramp. Just a natural game limitation.