He discovered it on accident while working on one of his games. The video is from his work-in-progress multiplayer game.
Please excuse his English, it isn't his first language, and this is a very early video of his.
The way he optimized the physics allows the application to move large amounts of objects at the same time while using minimal Processing Power.
I am still trying to figure out how this could be applied to a 3D game.
Here is my attempt to explain it:
When you are trying to convert a value to an integer and set it to 1.9, it is still 1. Also, when using integers, you can end up with a reversed Y Axis.
You also have the ability to devide the force between multiple moving objects while having them move the same way as the same amount of force being applied to only one object, and it uses the same Processing Power as only one moving object.
In addition (see below), the objects are just acting with pre-programmed algerythms whenever there is an algerythm available, and thus "real" physics are not required.
Another technique is to set Dynamic Objects to include a script to become static when there is no even incolving said object occuring at the moment. This is very useful because Dynamic Objects always use up processing power, even when nothing is happening to them, they are not doing anything, or they are not moving.
All of this might just make a difference when you try to cause an avalanche of 1000 Explosive Barrels in a game of Crysis, or when you try to use a cannon to launch hundreds of Watermelons in Garry's Mod.
YouTube Conversation (7 months ago):
Jurisnake: By "fake" it is meant that these block-objects are not following a consistent physical law. They just react to certain situations in a way that makes them "look" physically believable.