I actually kind of wondered it myself. Trying to think too realistically in a game I find makes my brain hurt, so I try not to do it too often, but I at least came up with a few things.
I imagine taking a glove, and first filling it with hard plastic, sort of like a lining. That will hurt someone indeed, and I'd say it could cause physical damage.
Then I take another glove, and put flexible metal plates in it. They are probably heavier than the plastic, and might indeed hurt more. If you asked me what I'd rather get hit with, I'd say the plastic.
I take a third glove and line it with, say, lead. It's the heaviest. I then give it to someone with the strength to wield it well. Yeah, I'd say that one may well hurt the most and be equivalent of someone hitting you with a club.
So it does make sense that the lacings can increase the damage. I could also think of it in the way of bones being stronger allows a person to exert more force. I remember reading that a typical person is actually a lot stronger than they might seem, but what prevents people from doing crazy things is the fact our bones can't take it. Bone Density can function like this. Stronger bones=more force being able to be exerted with said bones. You hear stories about folks in a rage(aka, not really controlling their strength) breaking some pretty bad stuff, but in the process mangle their bones pretty well. Stronger and laced bones would help this.
Of course, take all of that only if you want more realism. Otherwise I just say ''that's how it says they work, so this is how it is'' to prevent my head from hurting.

Now, Cyberarms not being physical? Erm...yah, got me there. I'd accept the whole ''they are sensitive and have breakable parts so you can't use them that hard'', but then you'd have to take out about every piece of cyber that causes undue force on the arms and they'd be useless as anything but prosthetics. So yeah, I'd say a metal arm turns stun to physical.