Basically, ragdoll physics means, when a guy dies they won't just go into a set, fixed 'death' animation. The way they fall will be calculated, depending on where you shoot them and with how much power. Ragdoll physics is particularly stunning when you kill a bad guy on some stairs: he'll tumble and fall, and all of this animation is being worked out by the game as it goes along, rather than being pre-progammed. Many games have done this before, including Hitman 2 and UT2003.