How does the Party control “matter” if, as Smith asks, it cannot control things like gravity or disease, or even O'Brien aging?

In response, O'Brien says that the Party does not need to control matter. It does not need to control gravity or other physical laws. Why? Because the Party controls people's minds. According to O'Brien, it is far more significant to control a person's mind than it is to control the physical world. The reason for this is simple: if you control a person's mind, then you are able to control the reality that they perceive. O'Brien uses an example to illustrate this idea:

I could float off this floor like a soap bubble if I wish to. I do not wish to, because the Party does not wish it.

In this example, O'Brien is not saying that he could actually float off the floor—that is against the laws of nature. However, by psychologically manipulating people into believing that he could do this, it would create the illusion of floating off the floor. He could, therefore, alter their perception of reality through manipulation.
The Party, therefore, does not need to control matter, like gravity or aging, because it has something far more powerful—that is, the ability to change how people perceive reality. As long as the Party can maintain its grip on people's minds, it will be able to control their understanding of the world.