"Powder Game"[1] is the Flash game off the top of my head that fits your description. If you're looking for a more fleshed out version with many times more elements/interactions, check out "The Powder Toy"[2]!
Definitely a gateway drug to the sandbox/simulation genre for me (Minecraft, Rimworld, Factorio).
Countless hours spent blowing up pixel cities, tinkering with the particle interactions, trying to make a sustainable nuclear reactor... fun times indeed.