Destructible environments have been a thing for like....a decade or so? There's plenty of tricks to make it realistic enough to be fun without simulating every molecule.
A whole lot of manual work goes into making destructible 3D assets. Combined, I've put nearly a full work week into perfecting a breaking bottle simulation in Houdini to add to my demo reel, and it's still not quite there. And that's starting out with nice clean geometry that I made myself! A lot of it comes down to breaking things up based on voronoi tessellation of the surfaces, which is easy when you've got an eight-pointed cube, but it takes a lot more effort and is much more error prone as the geometric complexity increases. If you can figure out how to easily make simple enough, realistic looking, manifold geometry from real world 3d scans that's clean enough for standard 3D asset pipelines, you'll make a lot of money doing it.
We've had destructible polygonal and voxel environments for a while now, yes. Destructible Nerfs are a whole other ball game - we're only just starting to get a handle on reliably segmenting objects within nerfs, let alone animating them