There was a game for the Arc which this thread reminded me of, called - hey, no calling out at the back, I know you know it!

I'm not sure how the X Universe keeps track of these things. There must be a way. Mind you, with the processing power of modern-day PCs I wouldn't have thought that keeping track of a 130-sector universe would be too much of a problem. From what I can see, there's generally at most 30 stations (in the biggest sectors), a similar number of ships, asteroids (which just sit there) and some gates. I suspect that the way the game functions is as follows:
* Is the player looking over here? If so, draw; if not, skip.
* Is this NPC in the player's sector? If so, animate/move/deduce consequences, etc., visibly. Ships dock, undock, fight, get bits blown off, etc.
* If the NPC isn't in the player's sector, then do it all seamlessly. Not having to display the graphics would be a start. If there's a fight, roll dice to resolve it. (That's something I don't ever recall seeing: exiting a jumpgate into the middle of a firefight.) Handle the docking, etc. of ships, transfer of cargo...
That's only my take on things. It seems to work reasonably well, or did in X2 (I haven't tried X3 yet), although it has its limitations: for example, all the asteroids at the start of the game remained asteroids and weren't made into mines by NPCs, as you might expect.
But I'll shut up now.