A new fluid simulation algorithm that utilizes the same PhysX SDK framework that is used to simulate cloth and deformables is expected to be included in future versions of the toolset.
The above video shows the new algorithm, known as Position Based Fluids, in motion. The algorithm uses the Position Based Dynamics PhysX SDK framework, and is also expected to be made available as part of Nvidia's APEX scalable dynamics framework.
The team at PhysXInfo.com notes that the simulation uses an iterative solver, meaning it can maintain incompressibility more efficiently than traditional smoothed-particle hydrodynamics fluid solvers.
I'm still not convinced that these particle based fluid are really efficient. We observe physical effects of water most acutely on the surface and the terrain of the ocean floor or whatever it is below will have an impact on that, especially at shallower depths, but there seems to be a significant portion of the body of water that isn't having a significant impact on the visible result.
Fair enough. Their demo obviously works with moving objects (moving walls, holes in glass), I'm surprised they didn't show a character walking through it.