I've come to expect a mind-blowing graphics breakthrough every, oh, five or so years. I remember Starfox, the first 3D game I ever laid eyes on. I remember Mario 64, which has actually held up quite well. I remember Half Life and, much more vividly, Half Life 2, which had both incredible graphics and the first reasonably realistic physics engine. I remember the dynamic light/shadow system in Doom 3, which was the main reason I built my first gaming PC. That was back in 2004:
I remember being bowled over by Crysis, sort of, mainly because of the destructible environments. The last time I was truly amazed by a video game was when I first played LA Noire. That time, it wasn't the graphics, exactly. It was the slghtly-better-than-uncanny facial movement. Nobody had done that before.
Well, here's a preview of your next sublime videogame moment: the BeamNG physics engine demo. Unlike most physics engines, this one is built primarily around soft body physics. In a soft body physics simulator, most objects are deformable according material-like properties. Most other physics engines handle damage with a set of predefined breakage patterns; soft body damage is infinitely variable.
The demo video was rendered with Crytek's graphics engine — BeamNG's only real game, the free Rigs of Rods, uses the open-source (and much less visually impressive) Ogre engine — which shows off the potential of soft body physics nicely. This is how cars really crash, and how objects behave when the bump into each other.
I doubt this particular engine will be the one that brings soft body physics into the mainstream. The big guys — Havok and Nvidia — are both dabbling in soft body physics now that gaming hardware is powerful enough to support it, and they'll probably be the ones to bring it to the mainstream. But this is the first truly representative preview of how the games of the future will move, and how profoundly that will affect how they look and feel.