after reviewing the TOS I’m a bit confused if I’m allowed to create and distribute commercial apps that uses main functionality like physics simulation.
That is definitely allowed. As far as I know you’re allowed to make (almost, maybe a virus would void ToS?) anything in Unity. Just make sure you ge the right license.
The term game also is very flexible. Anything with at least one interaction (aka all digital elements) can be considered games
so apparently it’s referring to the use and exposing the “unity editor” or interacting with it’s functionality throw another tech like a (SaaS), but if my end product is the final “unity runtime app” even if I’m exposing functionality and parameters from the physics engine to my runtime executable still fine right ?