Really awesome physics simulator

I was sent this link last summer, and the videos blew my mind. In case the link's not working for you, it goes to an article about Lagoa Multiphysics, a 3D graphics program. Now, I know next to nothing about how physics simulations are done for videos (video games, movies, and all that), but based on how complicated physics is for a two-body system, it blows my mind that people are able to get such realistic models for such complicated motions. I'd love to see the approximations used for all this stuff. Oh, and if you're the type who wants to do this kind of work, friends of mine at RPI have complained enough about programing the physics for a computer game that I'm pretty sure studying there would be a good first step.