We're creating an action MMO using Three.js (WebGL) with an arcadish feel, and implementing physics for it has been a pain in the butt.

Our game has a terrain where the character will walk on, and in the future 3D objects (a house, a tree, etc) that will have collisions. In terms of complexity, the physics engine should be like World of Warcraft. We don't need friction, bouncing behaviour or anything more complex like joints, etc. Just gravity.

I have managed to implement terrain physics so far by casting a ray downwards, but it does not take into account possible 3D objects. Note that these 3D objects need to have convex collisions, so our artists create a 3D house and the player can walk inside but can't walk through the walls.

How do I implement proper collision detection with 3D objects like in World of Warcraft? Do I need an advanced physics engine? I read about Physijs which looks cool, but I fear that it may be overkill to implement that for our game.

Also, how does WoW do it? Do they have a separate raycasting system for the terrain? Or do they treat the terrain like any other convex mesh?

A screenshot of our game so far: