I might call this a "falling sand simulator" instead of a "physics simulator".

Lots of great resources to learn about them, if others are interested. I highly recommend https://maxbittker.com/making-sandspiel

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God that post is a blast from the past. I remember being absolutely obsessed with these games when I was a kid.

Speaking about pixel physics. Noita game presentation is legendary in this regard:

https://www.youtube.com/watch?v=prXuyMCgbTc

Here's the same thing from 10 years ago:

https://github.com/anmej/piston-falling-sand-prototype