[TeMPOraL]

I don't know how they solved it in KSP, I was just presenting a general approach for when you need to have things happen in multiple places around a large simulated universe.

I can imagine KSP going with what you described, because in that game, things you aren't actively controlling and that aren't in "physics range" (2.5 kilometers IIRC) are either treated as stationary or on-rails (i.e. they're in orbit, and their positions are computed with a closed-form equation); anything that's neither stationary nor in orbit will be deleted once it leaves the physics range. This way, there is no physics simulation to be done on things you don't control or aren't withing few kilometers of, so centering the coordinate system at your active vessel would be a very good approach.