It's an actual video from the conference where Epic was showing the updates they made to engine. So instead of the usual video which is just a reel of the updates, this actually has Tim Sweeney speaking, and another developer.
They provide a lot more information, and video, on how they do the in engine destruction. It in fact is totally pre-calculatd and doesn't use the PhysX implementation. And it may have a little real-time calculation to find ray intersection from the bullet, but nowhere near the amount of calculations that were implied by saying "real-time structural analysis...that can determine how objects break apart into pieces given stresses and strains." I kind of figured he was embellishing a little bit on that statement.
But anyways, have fun watching it!