It looks like in TPU v4 cluster each pod with 2 or 4 (?) TPUs has 6 optical interfaces, which directly connect to next pods. I have no idea how they route though this configuration, but my guess most messages are weight updates, which are essentially broadcasts, so it should work out fine with some basic forwarding.
The torus topology makes sense for ring algorithms: Allreduce, Allgather, Reducescatter. For purely data parallel training you could put all model replicas into the same ring (although Nvidia also uses hierarchical algorithms that benefit from lower lately). With added model parallelism one will need smaller rings running concurrently. I guess the TPU cluster layout will then put constraints on the most efficient model architectures (as does the network topology of a GPU cluster).