I'm not in gamedev anymore (and didn't do graphics when I was), but my vague impression is that real-time fluid simulation has become more common over the past decade, and I think that's what you're describing as "physics" here and is what makes point-based VFX actually look cool.

Without a fluid sim, point-based particle systems just look like fireworks. It was a cool effect in, like, the early 90s, but is is passe today.

The next step up from that is having each particle move independently with its own physics (some momentum, maybe a little wandering around from "wind", etc.) but then rendering them using little texture billboards. That's what games did up until relatively recently and looks pretty good for explosions, smoke, etc.

But now machines are powerful enough and physics algorithms clever enough to actually do fluid simulation in real-time where the particles all interact with each other. I think that's what you're seeing now.