No. When something is very far away from you, it will probably not even be visible, if it does appear it will be very small. You will not be able to interact with it. From your perspective its position does not need to be precise.

With a sane game architecture for this kind of game you dont need higher precision floats. This has been done in loads of games. I mentioned KSP because a tiny team did this in Unity (not even their own engine)

Considering how it will instantly double all the payloads, this is something you'd particularly want to avoid for a multiplayer game.

I can only guess that they did this because they used cryengines built-in physics, and every ship in an instance is in the same phsyics 'world' (which is insane)

"The independent physics grids per ship implementation was a big deal"

Thats not a big deal. Its relatively trivial to do imo. You just have multiple physics 'worlds' and any bodies which protrude into another system are represented by kinematics in the other system. Transitioning from one system to another could look very weird, simply because the fantasy of the game does not cog with consistent physics, but they have not overcome this problem either.

I imagine implementing it whilst using cryengines built-in physics system may have been the truly colossal task. But why in gods name are they using cryengine (an engine strongly geared towards making crytek fps games) to make space game?