The vegetation is not static, it has its physical characteristics and reacts with the wind. Even the small grass fibers. They only don't react to the character's passing but I only remember one part of the game where you can see ferns or tall vegetation (a memory of Senua).
That is to say, I don't think it is a technical limitation, the Studio has simply preferred to focus on other aspects because the vegetation in the game is limited to small grasses in 99% of the game.
That said, the game has great cloth and clothing physics, without any popping. Hair, even strands of a few hairs, have their own physical characteristics. And so remember you can move small stones in your path and they have their own physics.