But that's where humans and their fandangled logic comes in! Now, how could a bullet possibly hit someone, if it's practically in a different time zone from them? Short answer: it can't! (Unless you have teleporting bullets, in which case you should be selling the technology for billions, not shooting people with it). So, take this giant map, and split it up into anywhere from a few to a bunch (so specific, I know) of little bitty squares. Now, as players move around, you've gotta keep track of which square they're in, which takes a bit more work. But now, when you have a bullet (or a few thousand) flying through the air, there's no way it's going to hit someone that's not within either its own zone, or maybe one of the adjacent zones. Now you've gone from checking every player in the game, to between zero and a handful! Much easier!
These same sorts of logical assumptions can be made for all sorts of locality-based applications, like virtual lighting (really, do you want to simulate a billion photons shooting around a room?), more advanced collision detection (we've done point-like bullets hitting round-ish parts of bodies, but what about really complex, non-convex things hitting each other?), as well as odd things like splitting up a group of points into non-spiky triangles (or tetrahedra). That actually has applications in fluid dynamics, modelling the density of stars in galaxies, and a bunch of other things way over my head.