Not necessarily new - physical modeling software has been around for a while.
See
Tassman 4 - Applied Acoustics Systems
Pianoteq has used physical modeling for the piano, EP and vibe sounds in their plugins; instead of a multi-gigabyte library you get a plugin of 12 MB or so.
You can also do physical modeling with hardware synths - Nord Modular G2, Yamaha VL-series, Korg Z1. It depends of course on the available model; flutes and bowed strings are completely different with different settings.