Strength in DF goes up to super-racial levels, so real life doesn't quite apply. Creatures generally seem to be stronger on average compared to real life, in my opinion. (Just think of the stuff people can pick up)
Now, for pulping:
Imagine a warhammer from a fantasy setting made from pure steel. Raise it above your head and smash it down at something lying on the ground.
Whatever you hit is almost certainly pulped.
The way I imagine it is that the bone you hit has been smashed into enough fragments that it will never heal.
It does take a large amount of force, but it isn't impossible.
I mean, that's the main effect, isn't it? That part is officially permanently useless, but still attached. Of course, you also need to destroy the nerves and cause serious damage to the other tissue layers, but that's basically guaranteed in a hit like that.
It isn't jelly, necessarily. It's smashed. It's what you get when you squash a bug; a mangled mess.
A better picture is what you'd get if you squashed an orange or something. The skin doesn't even really have to be broken.
Fists wouldn't normally do this by the simple virtue that your fist would also suffer the same force and its bones are less durable than a skull. Basically: you're made to be unable to punch that hard, because your own body would also suffer.
Creatures in DF are obviously exempt from this though.
There's also the fact that, in general, the neck is more likely to bend and break than in DF, instead if the skull breaking (if standing and hit in the head), though I'm not entirely sure how twisting has changed that.
Also, don't forget that we're looking at heavily localised impacts too. A Bronze Colossus can hit a dwarf's upper arm only, even if their fist should probably crush the entire dwarf in one hit. Not sure what the contact area even is in this case.
Point is, you can compare to real life and it can happen, but the physics behind it all might not translate well from DF to RL.