It is the difference between a normal graphics effect and a physics based one. The fog rolling off of your body in Batman is a physics based effect, the fog by itself is a simple graphics effect. The papers being tossed around at your feet when you walk over them is a physics based effect, debri randomly flying around is a simple graphics effect. That the 58xx parts can very, very easily render the visuals involved is not in question in any way, but handling the calculations to have those graphic effects interact with the physical world around them is a task that must currently fall on processors in AMD equipped systems.Why would the issue be the CPU? Most of the effects in Batman seem to be possible with previous tech such as the fog effects and stuff like caution tape that breaks when you cross it. I think there was also some extra glass breaking.
They are absolutely possible, but they are extremely processor intensive. This is where something like PhysX helps out, GPUs have more then an order of magnitude more power at handling these calculations then CPUs do. This could easily be done by another API, someone creating something under OpenCL it the most likely solution, but there is no doubt that GPUs will remain vastly superior to CPUs for physics based calculations for a long while, particularly when comparing them to desktop x86 offerings.Don't get me wrong, it increases the immersion of the player into the game but these effects seem possible before PhysX.
You can turn them on if you'd like. The numbers I have seen indicate that a 9800GT will be faster with PhysX on then a i7 and 5870, by a decent amount too. The calculations are too intensive for the FP capabilities of current processors.Also, anyone who wants full eye candy usually has a tricked out system anyways so needing a more powerful CPU vs needing an extra video card for PhysX isn't going to be much of a barrier for those who really want the extra effects. I just question whether the effects were possible only with PhysX like nVidia claims.