Comment by CBLT

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!