Virtual stacking is essentially a feature for ease of management from the dashboard.
The switches remain separate in terms of physical operation and network topology.
Physical switching on the other hand is where two (or more) switches are physically connected to eachother using the stack ports.They are managed and act as a single switch, providing benefits or redundancy and faster switching of packets between ports on two different stack members.
Physical is only supported on certain switch models so make sure to check the Meraki MS Datasheet or the below linked stacking guide.
Stacking Guide for reference: Switch Stacks - Cisco Meraki