I assume he'd have to go through a medical like anyone else would. If anything other than his elbow popped up as an issue Toronto would flag it. As for his elbow they know he underwent Tommy John, they likely could have flagged it too if they didn't like his rehab progress. They're happy with his elbow progress and nothign else came up so he passed.
Like you say passing a physical isn't meeting some benchmark. Passing it means the team is happy with where you are medically to offer you the deal you had agreed upon. It's why Correa failed 2 medicals for 300+ million over double digit years but passed one for shorter term