I don't know if "encapsulation" is the right word, but the "undamageable" state should definitely have included fall damage. No point in having more than one way to reduce health points, damage is damage.
They generally move at a pretty fast pace and change often(due to the iterative nature of what's "fun"). I don't think I saw a single unit test until I was well out of the game industry.
Their blog regularly goes into details about how it all works. It's very much worth reading.
It's been a few years but if I recall correctly we did have a "smoke test" running on a jenkins box under someone's desk that booted a few levels with most of the game entities(they were called danger_room_1/2/3/etc) and verified that the game didn't crash. Aside from that though there wasn't much else which lead to some spectacular build breaks.
Ah the joys of "AAA" development.