released in the past ten years
Why in the past ten years? Why not compare it to 15 or 20 year old games that did a better job? Is it because game dev skills have declined so sharply?
But okay, you yourself mentioned Monomyth, which is far more systemically sound.
Even the RPG Titles of the Assassin's Creed series (Origins, Odyssey, Valhalla) have more environmental reactivity.
Every Dark Souls game and Elden Ring has wooden furniture shatter when you roll through it.
If we're still talking about simple things like arrows being actual objects, or clutter items reacting to physical forces, there are plenty of games that do a better job than Avowed.
Of course, you can say that Avowed doesn't want to be like any of these. It doesn't want to be Skyrim, where you can shout fus ro dah at a table and send all the food and cutlery flying! It doesn't want to be an imsim like Monomyth or Dishonored where you can pick up and throw objects! It doesn't want to be Dark Souls where you can dodge roll through wooden barrels and break them!
Okay, but
what it is is a first person RPG with a relatively realistic representation of its environments. It also has a full 3D world where you can jump and explore everything in three dimensions, unlike Bioware games which stick your character onto essentially a flat plane and ankle-high barriers can't be crossed. In those Bioware games, like Dragon Age and Mass Effect, the limitations are accepted because the games communicate their limitations through both mechanics and map designs (particularly the minimap, which clearly shows the borders of the walkable area and conveys how confined and limited the levels actually are).
Avowed does not style itself like those Bioware games. It styles itself like a Bethesda game. Or like New Vegas, which Obsidian themselves made. Yes, they were given the engine by Bethesda, but still - it set a precedent for what people expect from an Obsidian-made first person RPG. Picking a worse engine this time around was entirely their fault.
If you style your game in a certain way, you should also deliver on certain expectations of that game style. Free movement, full 3D, first person means people expect to interact with the environment at least to a basic degree. But in Avowed, you can't. They could have styled the game like Mass Effect, with 3rd person perspective and obviously limited maps rather than full 3D movement, if they didn't want to commit to a full world simulation. But they didn't. They picked a perspective and style that sets certain expectations, and didn't meet them.
And to go beyond little details like object physics, which are just window dressing and not the meat of the game - they also failed at the meat. You can't kill friendly NPCs at all, when in New Vegas, they made sure you could kill everyone you meet and still complete the game. Full player choice in how to handle everything. Solid quest design that can be toyed with and broken, yet will still work. Why didn't they do it here, if they did it before? This is on the writing and quest design people. They failed to do the job they should have done.