Why? What physical limitation will dictate that we can't have 1B tokens for cheap?

Assume you build a machine that can simulate some system 1:1. Then it means the machine is exactly the same as the system, and the cost of running it will no less than the system itself.

If you want to reduce the cost but still get something useful, you have to make some abstraction, and we all know that any abstraction is leaky.

Thermodynamics is a harsh mistress