With the upcoming Godot 3.0 release, there is a pretty major change to the physics system within the engine. They have decided to replace the in-house physics engine with the open source Bullet physics engine. Bullet is a well established open source project and has been used in such games as Rocket League, Grand Theft Auto 4 and DiRT as well as powering applications such as Blender and Cinema4D. This change will not affect 2D physics in the Godot engine.
From the Godot announcement:
Introducing Bullet
Godot always supported an abstract physics interface, so Andrea Catania (Odino) volunteered to add Bullet support as a backend. I initially though it would not be possible to replicate Godot’s API in Bullet faithfully, but Andrea proved me wrong and did a fantastic job. He also finished before the Beta deadline, so his work was just merged and will be present in Godot 3.0.
Physics should work just like before, and no code should change, except Bullet is being used internally. Godot’s old physics engine is provided for compatibility and can be selected in the project settings, but will likely be removed by the time 3.1 is out.
In an unrelated but similarly timed announcement VR support was also added to Godot in the recently released Alpha 2. You can read more about VR support here. I did a hands-on video about both physics and VR in Godot available here or embedded below.