Is P3 (and possibly Inspire 1) camera's non-distortion feature a result of the direct optics, or the in-camera software calculation?

Optics.  It has a narrower field of view.

I think the narrower FOV is the better way to do things, and I gather most people would agree, but technically it does mean it can't see as far to each side in the frame.

It's not so much a non-distortion feature.  
It's a different lens from the 140º fisheye lens that Gopros and earlier Phantom 2s had.
The P3 has a rectilinear (flat field) wide angle lens (like most other cameras do) with a viewing angle of 94º.

labroides@yahoo Posted at 2015-4-24 07:24
It's not so much a non-distortion feature.  
It's a different lens from the 140º fisheye lens that  ...

If you were to change the GoPro to narrow FOV  wouldn't that eliminate the fisheye? Been wondering this for a while

No, rectilinear lenses are built differently from fish-eye lenses.  Narrow FOV on GoPro is nothing more than cropping down on the active pixels on the sensor.  The image is still coming through a fish-eye lens, but a smaller center portion of the sensor is being used.  This is why 4k is not possible at any other FOV than wide on the GoPro, because 4k is using up most of the sensor space, and there is no room to crop down without losing resolution.

In my opinion, the benefit of the rectilinear lens on the P3 over the GoPro is the ability to shoot, and keep, 4k resolution without the fish-eye effect.

tpallai Posted at 2015-4-24 07:58
If you were to change the GoPro to narrow FOV  wouldn't that eliminate the fisheye? Been wondering ...

Narrowing the FOV simply cuts off the edges of the image and gives you a smaller image.
It does nothing to remove the fisheye distortion from the smaller image.