Physical errors, I mean actual things that are wrong with the platters. When a drive crashes it can often be due to the fact that the heads dig into the platters within the hard drive. These platters store the data and when they get damaged the data is lost.

Some specialized drive recovery companies can take the drive apart and put the platters in a special machine to read from them. This means they can recover almost anything, except from what has been damaged on the platters. I only used a service like this once, when someone had stored close to a year of data about a project he managed that was critical to the company on his personal laptop. (Of course against all policy ignoring all the nice resources such as document management systems and network folders, but I digress.) This worked quite well, unfortunately all the data we got back was sorted into folders with descriptive names such as 1.doc, 2.doc, 1.xls, and so on. This is due to the fact that the partition table was lost.

Anyway, I hope the explanationed helped a bit.