Gamers seem to want a basis in reality with their games. They don’t want characters falling through floors and they want objects to move like they would in the real world. In first person shooter games for example you want bullets from your gun to hit your enemy and inflict damage on different parts of their body, you want them to react to the force of those bullets realistically while you want other objects in the world to react as well. If you drive your car through a building there is going to be a lot of debris, a lot of particles, and a lot of new objects broken off from the materials of the buildings. Gamers want this same level of realism in their games.
This is a good look at what the Havok FX has to offer, in addition to how NVIDIA likes to do things. If NVIDIA is right about how many physics calculations GPU’s can handle, then the AGEIA card may be in trouble. Check out the full read at Hard|OCP.