> If someone gets physical access to a device, it is compromised.

This is the same with your computer. What's your point? Do you have no private information?

(Don't say "everything's encrypted": it's the same with passworded iPhones, and again: same issue with your PC. There are numerous simple hardware compromises like keyloggers, or removing and chilling RAM to get keys unencrypted from memory, etc)

If someone gets physical access to the phone, most data is certainly compromised. But there is still value in a passcode, as the system/apps on an iPhone can store the most valuable data (e.g. saved passwords) encrypted using the passcode as the key. Without a passcode losing your phone means immediately losing the keys to your entire online kingdom. Especially if you have email credentials set up. (Even if you have been using a passcode when you lose your phone you should still change your credentials, but in the meantime it is much less likely that your accounts are compromised.)