those old material sandbox(not sure what else to call them) flash games.
https://en.wikipedia.org/wiki/Falling-sand_game (a bit of a stub article, but I think that's what you mean... Maybe "(particle|sand) simulator", and other terms, would apply too)
From what I can tell, this (with an initial 'worldgen' component and no 'hand of God" arbitrary creation, outside of the dev-tools/Cheaty-McCheaty-cursuring) is the way it is supposed to work.
Most falling-sand games these days support a heat 'layer' atop of substances (esp. if there's combustion interactions and freezing/melting etc), and pressure, perhaps illumination, electrostatic potential, localised gravity (other than default "everything falls", to add to the cellular automata element... The simpler ones just work on pixel colour to identify what neighbours are, and what state they are in (a given range of shades of blue are water and the precise blue indicates how close to freezing/boiling it is, e.g., which is chosen to look visually appropriate), while others work with bitplanes of information that then get
rendered into appropriate (but maybe now not entirely unique) colours of pixel.
From prior descriptions of, amongst other things, the mining operations, I think this one is done by hybrid, yes? Or at least one bitplane is a bitSplane of base colour/hue. Something was said about the change in colour of ground being dug (which varies by depth) giving the chances to extract resources, but illumination effects map over the eventual output visuals too, air pressure is varying according to height above(/depth beneath?) datum, wind is applied as a matt (or at least overlain) effect, fire has seats that spawns flame graphics atop its heat effect, buildings are 'sprites' but the bitmasks that dictate where their graphics are shown are destroyable by various natural/unnatural interactions. The rain is a particle-storm that passes through 'atmosphere' bitmask, but when it hits designated surfaces it becomes(/has a chance to become) a sandbox-liquid that finds its own level, perhaps interacts with fire-mask/seat blocks, probably has chance erosion-interactions on various types of ground/rock layer information....
I'm guessing most of that. It's how I'd perhaps do it, but then that probably guarantees that there's far better ways of doing most of it, much less data/process intensive.
![Wink ;)](http://97.107.128.126/smf/Smileys/aaron/wink.gif)
(Atop of all that, there's the galactic simulator, spaceship movements, intelligence/civilisation/political agent-emulation, the whole thought behind the (usually) limited interactions the player has with the world (including having to work with resources/tools to get more resources/tools, in a city-management way rather) rather than "wave a hand to generate falling lava out of nothing" as per the eternally-GodMode sand-game. And new surprising elements every time we get an update, it seems to me.)