If you ever wanted to start a fight in Second Life, just mention the word Havok. Second Life was built on the ancient Havok 1 engine, which is responsible for all things physical and sim related such as objects, moving objects, cars, planes, the amount of avatars available on a sim, and sim stability. The best analogy I can think to describe Second Life running on the Havok 1 engine is imagine being in a corporate environment where everyone is still using Windows 3.11. It worked, but it was very old and outdated. Linden Lab has been working on some time on implementing a new Havok engine, Havok 4 which has been released by today.
Havok 4 has long been discussed, beta tested, crashed, and beta tested again. In some conversations I’ve had with a few Lindens about Havok 4 they are really excited, not about the implementation but also it’s potential. Havok 4 really means that Second Life will be more stable, sims or areas in Second Life, will be able to handle physics better. You also have to think that Havok 4 is only the beginning; their current implementations of the engine are for stability, but imagine if Linden Lab really pushed the Havok 4 engine. This could mean more avatars on a sim? Possibly more objects on a sim? Better sim crossings? It seems that a very interesting implementation is already in the works, Avatar Puppeteering.