Ooo a Cryengine thread
As someone who's been working with Cryengine 2, and now CE3 for around 4 years (since Crysis 1 Beta 3), I think I can explain this.
Firstly, the statement IS correct. Crysis 1, Warhead, Wars and Crysis 2 are entirely "real time" all the time. This means a few things, which can get quite complicated, but let me try to explain. Unlike older / other engines, nothing in game is pre-computed, be it Physics, lighting, etc. Its all calculated on the fly using whatever you have on your computer (this is also why Crysis 1 was so hard to run).
For lighting this means a lot of things. Firstly, as it uses a form of deffered rendering, it means you can have 100+ lights on screen at a time, and never have to wait for the engine to calculate shadows. When you move a light, you dont need to press 'compute shadows' or some such - it does it automatically.
For physics, its pretty similar, however it was nerfed hard in Crysis 2, and is much better in Crysis 1. For example, in Crysis 1 there were often tons of shacks made out of wood, metal and so on. Inside would be dozens of objects, also made out of wood, metal, etc. In older games, and even recent games (yes, you, BFBC2), if you detonated a few sticks of C4, the building would fall the same way every single time. However, in Cryengine, this is also calculated in real time. To be more technical:
Once a force is applied to an object at rest, it 'physicalized', or in other words, has physics enabled. So when the C4 goes off, the shock wave hits all the objects in the shack, as well as the metal plates and wood board making it up, and "physicalizes" them all, in real time. After that original impact, the trajectories, interactions, etc. are all done in real time. So if one board hits another, the direction of said board changes. This goes for the objects inside as well.
Lastly, and most importantly, this helps MASSIVELY with editing (or modding). In almost every engine out there, to test a map that you had just made, you would have to hit compile, then load up the actual game, then load your map, and then try it. In Cryengine, you simply press "ctrl+g", to enter game mode, right in the editor. When your in this mode, its just like being in game (well, RAM usage is a bit higher). However, to do this, NOTHING had to be compiled. There was no pre-calculations, or compilation, etc. You press the button and you're done.