I feel like biology and physics are completely separate
For where biophysics is heading, and due to the distinction that is arising between "biophysics" and "physics of living systems", I think the idea that it goes physics $\to$ chemistry $\to$ biology is no longer the case (if it ever was). People are actually using biological systems to learn more about physics now. So these fields are actually deeply connected: many biological problems now require physics (either directly, or at least in application of its principles, techniques, concepts, etc.), and many biological systems can be/are used to learn about physics.
although physics determine what's possible in biology, we have no idea how physics determine every facets of biology.
It is true we do not have a complete knowledge of the physics of living systems. But we still have ideas as to how they are connected and applied.
Onto the title:
Does physics explain why the laws and behaviors observed in biology are as they are?
While my answer has claimed a strong link between physics and biology, there are of course distinctions. The statement "laws and behaviors observed in biology" is very broad. In physics, we all know the same principles; undergraduate physics education is essentially, "here are all of the principles of physics", and then if you go further into research you are essentially learning what those principles do in the universe. But if, say, a particle physicist wanted to talk to a solid-state physicist, they could still assume knowledge of the same base ideas in order to further understand each other.
In biology, it is somewhat the opposite. The field of biology is so vast and covers so many systems that there isn't really a shared set of underlying principles all biologists use. Someone working in developmental biology in the fruit fly will not be able to use their principles to determine what is going on with a biologist who is studying the interactions of species within some ecosystem. Just look across the answers to this question: there are so many areas of biology to consider, and they each have their own principles.
So while at the surface one can take the easy way out and say, "well, everything in the universe has to ultimately follow physics", if we dig deeper then we really need to be careful about what we mean by "laws and behaviors observed in biology". I might argue that there isn't a well-defined set of biological principles to even start exploring this question. (Although attempts are being made, e.g. William Bialek's book Biophysics: Searching for Principles)