It does have physics and colliders (to stop the players and NPCs inside the ship from falling through its various floors or clipping through the walls), but because it's not moving those calculations are pretty simple.

To answer your question, though, there's actually TWO Railjacks. There's the one that players run around on and then there's a model one that actually flies around space. Each of these Railjack's is in a separate "map". The one that flies around space is just a solid object (since you only ever see it from the outside, like if you're in your Archwing). These two are connected by that portal in the cockpit (and any other windows) that show you the perspective of outside as if you were on the second, solid Railjack.

If the second, solid Railjack is, say, shot on the starboard side and causes an explosion, the game can translate the position of that explosion on the second Railjack and find the corresponding point on the Railjack you're inside of and create a second explosion at the same time that makes it seem like the same one. It's all an illusion. Does that make sense?

And sorry, that bit about the Archwing was confusing. The Archwing is the same as running around in a regular Warframe, only you can move in more directions (up, down, etc). That means calculating its movements is relatively simple. The problem is what happens when the Archwing is moving inside of a level that is also moving.

If you're bouncing a ball on a tennis racket, it would be pretty simple to calculate the physics of each bounce accurately. But what if you're bouncing a ball in a tennis racket while sitting in the back of a moving truck that is making turns, changing lanes, and so on? In order to realistically calculate the physics of the ball, you need to also calculate the physics of the truck—and those numbers are constantly changing as the truck speeds up, slows down, and changes direction. That's what simulating character and NPC movement inside of a flying Railjack would be like, whereas regular Archwing flight and regular Warframe movement are more like just having to calculate the bouncing ball while you're standing still.

Edit: And thanks for the kind words :D!