Physics is the science of matter and energy and their interactions. (thanks google
Basically, the Source Engine, as far as I'm aware, was the big breakthrough with physics being shown in games, Basically, if you haven't figured it out. the PPU will basically handle all the physics processes in games. How fast something moves, gravity, friction, mass, all that fun stuff that makes gameplay realistic will be handled by the PPU.
This basically means the CPU and GPU don't have to focus on these processes anymore, which means we get better physics out of games, as well as better graphic quality and so on and so forth.
If anyone is out of the loop and is scratching their head at this point, check this