Many forms of cheating revolve around modding the game locally so that certain textures can be seen through walls, so you always know where opponents are. So you aren't breaking any laws of physics, you are just able to make much better tactical decisions.
The obvious solution would be, just don't send data to the player's client about enemies that are behind walls. But this is a surprisingly hard thing to engineer in realtime games without breaking the player experience (see: https://technology.riotgames.com/news/demolishing-wallhacks-..., and then notice that even in the final video wallhacks are still possible, they're just more delayed).
> So you aren't breaking any laws of physics, you are just able to make much better tactical decisions.
With respect I'd like to disagree on this subtly. A lot of games have the client send their cursor position at relatively frequent updates/packages (i.e. sub-second). So the server knows pretty precisely in which direction and to which object a player is looking.
This in turn can be readily used upon when using wall-hacks, as most players, who use wall-hacks tend to almost faithfully follow objects behind walls with their cursor, which good moderators can usually spot within a few seconds, when reviewing such footage (source: I was involved in recognizing Wall-Hacks in Minecraft, where players would replace textures, to easily find and mine diamonds underground).