What do the levels of Nvidia PhysX do?

In the Video options there's a setting for Nvidia PhysX effects on PC. What are the effects of each setting on visual/physics effects? Are any aspects of gameplay itself effected?

PhysX started at Low on PC and I enabled Medium and I started to notice blood/acid pools from enemies that had physics effects. Are these enabled by this option?

Solution 1:

No aspects of the gameplay are effected by enabling this, but aesthetically there is a large difference. An nVidia card is not required to run with higher PhysX settings in Borderlands, the calculations can be done on your CPU but you will take a noticeable performance hit.

Turning the PhysX option up will effect things like cloth animation, particle effects, fluid animations, etc.

There are several videos on YouTube that run side by side comparisons of the various visual differences between the settings, here is one which does a side by side comparison with the PhysX setting on 'Low' and 'High' (the video says 'Without GeForce/With GeForce', but it has been discussed elsewhere that many users of AMD hardware are able to run the game with the PhysX setting on 'Med' or 'High' without any nVidia hardware at all).

The differences between the settings are pretty noticeable, but especially so with liquids and explosive weapons.

There is an article on the nVidia website (right at the bottom of the page) which details more specifically what the individual PhysX levels affect, along with a performance related graph comparing nVidia and AMD hardware.

            Low              Medium                   High
Debris     No GPU effects   Particle count reduced   Max quality debris
SPH Fluid  No GPU effects   Particle count reduced   Full range of effects
Cloth      No GPU effects   Low quality cloth        Max quality cloth
Particles  No GPU effects   Particle count reduced   Lots of sparks and embers

Furthermore, here is some nVidia descriptive text as to the differences between CPU based physics and PhysX, quoted from the above article:

With CPU physics, the emitted debris would shoot across the screen before fading out of existence, or in some cases, sitting motionless on the ground, unaffected by the action occurring around it. In Borderlands 2, with hardware-accelerated PhysX effects enabled, this debris will be kicked about by further weapons fire, or from characters running through it. Pieces will land on inclines and roll towards a level surface as in real life, and should another piece be in the way the two will collide, further changing their final position. Bring enough pieces together and they’ll pile up, and with the highest level of PhysX enabled these pieces will persist until removed to make room for yet more mayhem.

Solution 2:

Turns out there is a very minor gameplay difference with PhysX on: flowing cloth (flags, tarps) that use PhysX to flow realistically are solid with PhysX off, and block bullets completely. With PhysX on, the cloth can be shot apart and thus shot through. However the cloth is almost never in the way of actual enemies, so turning on PhysX just to be able to shoot through cloth is very useless.

Other than that 99.9% irrelevant change, the only differences are those aesthetic ones noted in Kalina's answer.