Can I use Xbox Reward Points to buy physical stuff?

Yes, you can. Xbox gift cards and Windows gift cards all add to your Microsoft account balance which can be used in the Microsoft Store.

They pretty much do. You can earn points through the Microsoft Rewards program and use the points to redeem gift cards to buy stuff.

Bing Rewards is the best. You can have up to 5 accounts in one household and earn more points that way. Xbox Live Rewards will chip in a few points every month, 20 for the survey and everything else is contingent on buying stuff. Between the two, I don't
buy Microsoft Points.

If you can get an invite, eRewards is legit. You do surveys and then redeem for $25 Gamestop gift cards. If you have multiple accounts, they can really add up. I used two for Judgment last week.

Gamestop's PowerUp Rewards program is ok. You pay $15 a year. You get Game Informer magazine, 10% off used games, and earn points which can be redeemed for merchandise. I think Best Buy and Toys R Us have rewards programs too.

I like the achievments as they are. You get rewarded with currency through the microsoft reward program. You could use the Points to get prepaid cards. So there is actual a way you get rewarded and could use it to buy stuff.

I think it depends on how well either program works for your spending. I typically don't buy anything on Live unless it's gone on sale. So since they changed the Xbox program back in 2014, I've barely earned any rewards, and earned more through the Microsoft
Rewards program because I don't have to spend money to get points. I also like that with the Microsoft Rewards program I can get stuff that isn't just currency on my account. I can get stuff I'll actually use more like gold or Amazon gift cards. And I can
redeem points for that stuff and get it immediately instead of having to wait for specific deposit dates.