Seth:

Can you explain that, please? Was it built in the game by a player? Was it built using that game engine by someone who knew how to program and create a new level?

It's very cool.
 

Sure.

First, there's the game--in this case, Half-Life 2. The game has what's called an 'engine'--the code that renders all the objects in the world and, among other things and most importantly here, handles all the basic physical interactions between objects in the world. (Often this is handled by a plug-in to the engine rather than by the engine itself; I'm not positive what the case is here, but I'm certain JP or Bezzy will know the answer if they come by.)

So all the basic world physics (e.g., if one object hits another the force is passed on in a way that simulates what you might expect in the real world) are built into the game. All the person who created this video had to know how to do was how to create a few simple objects in the level editor (maybe not even that--the slab and cylinders may be already existing objects). They then used the level editor to create the general environment--the raised areas and ramps. Finally, they combined the two, positioning the objects in the world.

Once everything was in place, they started up the game, loaded the level they had created, and used one of the weapons to impart some force to the first object in the chain. The rest of the physics was handled by the game as a matter of course.

Many major games ship with a level editor. With an experienced level designer on call to answer questions (he says, thanking JP for his help back in the DMH days), you could go from zero knowledge to this in less than a day. If you were on your own it would likely take a week or more, but only because most tutorials teaching newbies to use the tools are so poor.