Theory
As recently as one year ago you would be very hard-pressed to find significant backing for the need for hardware-accelerated physics. Early this year, however, developers started to realize that no matter how complex they made the physics algorithms in their game engines, they were unable to produce the advanced gaming physics necessary to bring the level of immersion to game play that was expected in order to complement the astounding visual effects starting to emerge in the latest titles. This "advanced gaming physics" would come to be defined as the simultaneous ability to produce physics effects on these four dimensions: Fidelity, Scale, Interaction, and Sophistication.

It should be noted that the complex nature of CPUs and even the parallel nature of modern GPUs can more than adequately produce physics effects in any one of those four dimensions, but they are inherently limited to only the one. The CPU is responsible for calculating and giving out orders. The GPU is responsible for receiving information from the CPU, rendering it, and displaying it on the screen. Taking away time from these responsibilities to handle the immensely unique physical calculations that would be needed to produce physics effects true to the four mentioned dimensions would not only be tremendously difficult, but it would reduce the overall performance of the computer for obvious reasons. Hence the need for a dedicated PPU to handle the calculations that allow the user to interact and perceive their surroundings as realistically as possible.

What exactly are Fidelity, Scale, Interaction, and Sophistication? Furthermore, why are they important to gameplay?

Fidelity, defined as simply as possible, is the accuracy with which something is reproduced in regards to its true self. For instance, in audio terms, the sound you hear coming from your headphones is in high fidelity if it sounds exactly the same as did in the studio on the day it was recorded. This applies to the world of gaming by describing the realistic deformations and dynamic movements that are the result of collisions during game play. An example of this would be in a fighting game: when one boxer gives the other a right hook to the jaw, the face of the victim would be deformed not only on the level of skin movement, but the jaw itself would be shifted; the whole body would react in the opposite direction in a way that is equal and opposite to the reaction in the first boxer’s glove.

Scale, in this sense, would be the ability of the effect to increase or decrease in magnitude in progression. If that doesn’t make sense, then think of scale in terms of the boxing scene we have just described. Once the boxer’s glove hits his opponent’s jaw, the beads of sweat on the impacted face are sure to be displaced. The ability of these beads to both be displaced, and perhaps fly from the impact in in the form of mist and drops of sweat like you would see in a real boxing match, represent the dimension of scale.