1. The current <shape> example shows one <instance_physics_material> with no related library. Would be helpful to show [an abbreviated] <library_physics_materials> with the definition of the referenced <physics_material>.
2. Then it should show the same situation but with the <physics_material> embedded in the shape rather than in the library, with an explanation that these are equivalent and it's your preference how to do it.
3. The child elements table should mention in <phys_mat> or <inst_phys_mat> line that the <inst_phys_mat> points to a <physics_mat> in a <libr_phys_mat>, to make usage clearer.