To be clear:
Physical craving: this is the powerful urge to continue drinking after the first drink, regardless of whether or not I am having a nice time, enjoying the drinking, feeling ill, acting anti-socially, or the threat of consequences. The physical craving refers to the effect of having the first drink and therefore to the effect of alcohol on the body and mind. It is physical not in the sense of being perceived physically but in the sense of being triggered by a physical change, namely the introduction of alcohol into the body. Wanting the first drink, even badly, or being preoccupied with the first drink is not an example of the physical craving.
Mental obsession: this is the thought that prompts the first drink, namely the idea that a drink would be a good idea (and the absence of effective counterargument). This is separate from a desire to drink and certainly distinct from the physical craving. It is termed an obsession because it persistently recurs, not because it is necessarily associated with powerful emotion, preoccupation, etc. It can be merely a passing thought that allows a person to take a proffered glass of champagne, 'accidentally' order a pint rather than an orange juice, or unexpectedly put a bottle of wine in a shopping trolley. It need not occur often to be fatal.
Preoccupation: this is sometimes referred to as 'craving' or 'obsession', but this causes confusion, as these two terms, in the Big Book, are reserved for other phenomena. Preoccupation is continually or continuously thinking about drinking or wanting to drink. It will not necessarily lead to a drink, unless accompanied by the mental obsession. If the person is sane, preoccupation will simply be a painful irritation, and can persist to some extent for years after a person joins AA and stops drinking. See the last page of Dr Bob's Nightmare for an example of this, or page 15 of the Big Book (Bill's Story).