What is ambiguous here? They excluded digital data by saying physical…

You didn't answer the question. To add, what is ambiguous about "direct physical damage"?

This is why you have breach insurance that includes a ransomware policy.

The appellate court was the one that made an absurd ruling on the level of "it's a series of tubes". Ransomware or any other loss of data does not constitute physical loss or damage.

In this case they got it right, this would be like saying your homeowners or renters insurance should cover losses due to a ransomware attack, which is patently absurd..

The case was bad on its merits and the rule is fine. If you want cyber security insurance you should buy an appropriate policy.