Why is Physics separated into Physics 1 and Physics 2?

They aren't necessarily separated this way but it's fairly common for 2 good reasons.

1) Mechanics provides a basis for understanding other areas of physics, so it makes sense to cover it early.  For example you can't easily understand electrical and magnetic forces or electrical potential energy unless you already have a foundational knowledge about forces and energy.

2) Electricity and magnetism are quite abstract and mathematical.  So it makes sense to allow students to study (less abstract and less mathematical) mechanics first. Students have matured a bit by the time they've covered basic mechanics.  (Well, some have!)

Along with the answers everyone has given, there is also the fact of how much you have to teach and how much time it takes.

Ours was put into the same class up to year 12 along with nuclear physics and optics.  The goal was to show how the 3 different basic elements all came together in modern physics.  However students rarely grasped that electricity and mechanics were closely related.

The Math in P2 is more advanced.

For the same reason that Biology is separated into Botany, Zoology, Microbiology, etc. You can't study everything in depth if all you get on each subject is two sentences.

I see them as introductory courses for engineering majors.