In the days of Moshiach, even though there will be the ultimate level of refinement, nonetheless there will be physical bodies, and the fulfillment of mitzvos will be in physicality, just that it will be on the ultimate level of perfection, as we say "there we will perform mitzvos like Your will". In the days of Moshiach there will be offerings like the mitzvos of Your will, because it is the man which offers an animal, and at present the aspect of man is not in a state of perfection, but in the days of Moshiach the aspect of man will indeed be in a state of perfection and evil will have been removed and there will only by the aspect of the image of G-d (Tzelem Elokim). Specifically at this time will there be the aspect of "mitzvos like Your will." Then, all the mitzvos will be in the ultimate perfection, but nonetheless they will be mitzvos of physical action and it will all be in physicality, as it says "there is no difference between this world and the days of Moshiach besides servitude to the nations," because the spirit of impurity will be removed from the earth, and materiality will be purified.
Sefer Hamaamorim 5711 (Rebbe Rayatz) p.207