Amazing program being developed at MIT. You can sketch objects and have life-like physics applied to them all in real time! Very cool application! 

Comments from Professor Randall Davis: 

As that's me in the movie, I'm in the position to add a little background to the story.

1) The movie may have been discovered by Youtube recently, but it's about 5 years old, made as a very early demonstration of our research.

2) As for the comment that "Microsoft made a better thing than this years ago for TabletPCs", well, yes and no. The yes part: the 
Physics Illustrator MS (a powertoy for Tablet PCs) was in fact a re-implementation of our code, done by working closely with us to understand what we had done, adding a much cleaner user-interface. (We created research code, not a commercial system.) Check the About acknowledgments on the MS code. And yes, the work was later supported by Microsoft: (http://icampus.mit.edu/MagicPaper/).

The "no" part: while PI's interface is professional-quality, the sketching you can do with it is more restricted than what our code can do. Among other things, PI requires objects be drawn with a single stroke, which our code does not.

3) The animation is indeed courtesy of WorkingModel 2D. Our research is in understanding freehand sketching, not physical simulation. Once the sketch is understood, a script is sent to WorkingModel to have it run the simulation. Our work is focused on creating sketch-enabled interaction, and we have done this with a variety of different back-end programs over the years. See http://rationale.csail.mit.edu/publications.shtml 

4) The program being demo'd was called ASSIST; it was the Master's Thesis of Christine Alvarado.