Arcade game machines achieve dynamic in-game physics for destructible environments through a combination of hardware capabilities and optimized software algorithms. These systems rely on real-time physics engines that simulate collisions, fractures, and debris with varying levels of detail.

Key techniques include:

1. Precomputed Physics: Some games pre-calculate destruction patterns to reduce real-time processing.

2. Particle Systems: Small debris and effects are often handled using lightweight particle simulations.

3. Simplified Collision Models: To maintain performance, complex objects are broken into simpler shapes for collision detection.

4. Hardware Acceleration: Arcade cabinets often use dedicated GPUs or custom chips to handle physics calculations efficiently.

Developers balance realism and performance by limiting the scope of destructible elements or using procedural generation for unpredictable yet controlled destruction. The result is an engaging, responsive experience that feels dynamic without overwhelming the system.