In his book "The Art of Interactive Design", Chris Crawford defines interaction as "a cyclic process in which two actors alternately listen, think, and speak." He goes on to apply this definition metaphorically to a variety of different objects and processes to argue that interactivity falls on a scale; it is not simply binary. Ultimately, he argues that many processes are responsive without being truly interactive (refrigerators, reading, etcetera).
I agree with Crawford's premise that interaction requires an exchange between two actors. Ultimately, I see physical interaction as an iterative conversation between these two actors.
What makes for good physical interaction?
Good physical interaction is engaging and provides feedback that draws the actors closer together in conversation. As Brett Victor alludes to in his rant on the future, using finger gestures on a digital screen does not fulfill this definition. These are simple, boring, and don't scratch the surface of what our bodies are capable of. Good physical interaction engages the senses, provides clear cues for how to proceed, and invites and excites the user (actor) to continue interacting (communicating).
Are there works from others that you would say are good examples of digital technology that are not interactive?
In the vein of Victor's rant, I would argue that smart phones constitute the best example of daily-use digital technology that aren't truly interactive. Watching clips of Apple's annual WWDC on September 12th, I am excited with how far we have come, and reminded of how far we still have to go to get beyond finger gestures on a screen. The FaceID feature of the new iPhone X, which uses IR to map your face in 3D, is an interesting advance in phone security, but I wonder if the underlying technology could be used for more interesting, engaging interactions with the phone (maybe AR related?).