I guess the server should have control over the client's resolution and LOD settings, too?
I think you misunderstand. I'm expecting people will often talk about how they're pushing a brick or something like that, and people who have lesser computers - such as myself - may have the physics turned off and not see that, so it won't make a great deal of sense. If the server could override brick physics to be turned off then it would allow the server admins to avoid that confusion between their clients. Albeit that this is a fairly weak reason, in my case it would be more along the lines of "I can't see them so I see no reason why you should either", should I choose to be a spiteful richard.
ladios might have his own reasons; perhaps he'd prefer simply to have it act like old blockland on his server/s. Therefore it would be beneficial to have that common point of view. Plus, you saw the number of noobs going "lol i cn crush ppl wit physic brik" in the Physics topic, even though it's been explained time and time again that this doesn't work. Perhaps ladios doesn't want the admittedly too large 'stupid' population of Blockland spamming about trying to kill you with brick physics.
Lolrant.