It's not quite realistic at the moment, as you hardly have to pay attention to silly things like thrust/mass distribution. But the damage model and physics interactions are quite good.
That seems to be one specific situation where they've chosen to let physics slide- thrusters apply force only centered on the mass of a vehicle, and this are completely incapable of causing any rotation. In other words, they're strictly translational. This, I'm sure, is just to
not crush the dreams of sci-fi fans allow people to place thrusters wherever they deem aesthetically pleasing. In case you're wondering, rotation is accomplished by implausibly-efficient reaction wheels which can be placed anywhere on the craft. The last annoying physics-gripe is that asteroids and stations are 100% completely stationary, which mostly bothers me insofar as I can't attach thrusters to an asteroid, but that's meant to save on physics calculations.
As far as gameplay goes, trust me, that's probably all for the better. It's bad enough when sustaining one impact manages to remove, say, all of your left-facing thrusters. Besides, realistic consequences of where you place your thrusters would probably disappoint anyone who builds a perfect replica of a star destroyer only to find that it yaws back ever so slightly when you move forward.
In terms of the ability to build space ships and then smash them with an entirely dynamic system, it does what it says it does, which as far as I can tell makes it the only game of its kind. Early-access though, which means that a lot of features (like non-creative-mode and large guns) aren't done yet, and the multiplayer is pretty unreliable right now too.