I’ve finally found the physics demo!
The demo was written by Maciej Matyka aka MAQ. There are Newtonian physics, partial differentials of wave equations, cellular automata and cloth simulations involved.
It’s also where I learned of t.A.T.u. the Russian singers and their song Nas Ne Dogonjat. I sang a little of this song here.
Here’s a sequel (of sorts) to the first Dream Equation: