Of course this one turned into a US vs. Other countries war. Well, I guess I will post my personal experience.
Almost everywhere I go now has Apple Pay. The layman doesn't know what to look for, but having worked in the industry I do. I even see people inserting Apple Cards into chip readers, that have Apple Pay on them. To be frank, this just means that John Q. Public can't comprehend with all of this "new tech"
I don't carry a wallet. On days I do, I carry a very slim one, that holds two cards, an Apple Card, and an ID. My state is one of the few with a mobile app that can replace your ID, called Arizona Mobile ID. I have used this ID during traffic stops, and to pick up pre-paid items from the Apple Store without any issue. You don't have to hand your phone to the cop, they just write the ID number off of the app and go run whatever they need in their car. If you really are afraid this is going to happen anyway, just turn on Guided Access, and triple click the side button 3 times to "lock" the phone to the driver license app.
My car has an app that I can just use to unlock the door, so I don't carry any keys either. I do have an AirTag on the car key on days I choose to use the key. I enter my home through my garage door, which I just use a HomeKit widget in control center to open if I am taking the bus, or the button that is already in the car if I am driving. If my phone dies, I have a backup way to get into my car, so I am not worried about that either. Same for the garage door, where I can just type in a PIN on the wall to open it as a backup.
The key here is choice. You choose how you want to live your life, I choose to live mine "on my iPhone" and Apple Watch.
And yes you can get by with just your Apple Pay in most cases, without having to worry about physical cards. In fact, a lot of restaurants I frequent, I just walk up to the server station to use Apple Pay and no one really had an issue with it at all, unless I know the place doesn't have Apple Pay at all, for which I plan for those days, and I can take my wallet with me. I don't go to sit-down restaurants on a whim, so its a non issue. and every fast food place but Wendys has Apple Pay.