The ship has sailed on this term of art, but as a native English speaker, I agree with you that it's ungrammatical. I would use a hyphen, though: "physics-based." This answer agrees with you (and me): https://english.stackexchange.com/a/428679.

Here's one way to think about _why_ it sounds wrong. "Physically based" would mean that "physically" is the answer to the question "How is it based?" To a native English speaker, that question sounds odd. A more natural question is "What is it based on?" To answer that question, you need a noun: "It's based on physics." Hence the construct "physics-based," like "evidence-based medicine" or "merit-based scholarships."

Firstly, "physically based rendering" has become a term of the art. This means that today, it's correct to use it to mean this specific thing no matter what the grammar rules say about the phrase. Furthermore, another phrase that would mean the same thing and is grammatically correct (like "physics based rendering"), is less correct in this context because it loses the specific meaning attached to the term of the art.

Secondly, "physically" is an adverb. This means it is grammatically correct for it to preceed "based" if used as a verb. If "based" could only be used as an adjective, then you're right, "physics based rendering" would be more correct.

Anybody more knowledgeable feel free to correct me!

It should be "physically based" since it's about rendering based on how light works physically, in the real world. See https://en.wikipedia.org/wiki/Physically_based_rendering

English is my native tongue, but it doesn’t really help analyze this type of thing. Titles often use terms-of-art and shortened phrases.

But, fwiw, to my eyeballs “Physics based rendering techniques,” because it uses the word Physics, as in the whole big field of study, looks like it is a Physics text that happens to include a bit of rendering.

“Physically based rendering techniques” seems like it is a work about rendering techniques, which will draw a lot from physics.