Physical simulation is a Action Design / Stuntvis term in filmmaking. In virtual production, the nuances of this term take on special meaning. Here, we break down the definition to give you a starting point.
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The calculation of real-world accurate physical interactions and collision detection within a real-time engine.
The techniques in physically simulated animation have to do with plausibility and visual appeal, apart from physical accuracy. This area within computer graphics works with the simulation of physically plausible behaviors. This comes with the need to include complex behaviors in video games, simulations, and movies.
The categories that fall into physical simulation are, amongst others, rigid body simulation, soft body simulation, fluid simulation, particle systems, and physically based character animation. Physically-based simulation techniques have been widely used in computer graphics because it creates highly realistic animation.
Here's a video by user Markom3D about Nvidia Omniverse, one of the best applications for physics simulations: