The distinction is between targeted and untargeted surveillance.
Digital communication is so easy to monitor, particularly by a state-level actor, that if it's unencrypted, it's pretty much all being hoovered up by someone by definition.
That's not the case for physical security, even if everyone leaves their doors unlocked, their windows open, and their notes on the kitchen table; everyone is not automatically a suspect, so most people aren't being put under the microscope.
The government likely has the ability to know, instantly, within milliseconds, everything I've ever done on the Internet that's unencrypted.
By contrast, they will likely never see the contents of the love note on my kitchen table. Well, if that pinhole camera isn't there, anyway. ;)
All of the approaches applicable to physical communications apply to digital communications too.
It's just that the _additional_ level, which in the physical world would be equivalent to knowing the contents of all of the conversations/interactions that people are having in person, is something that people wish to fight against and prevent from becoming normalised.