

If a small ship bangs the side of your titan-class destroyer, the only thing that will happen is that the small ship will put a small dent on the side and then blow up.

What this means is that your ship can take damage based on the amount of mass that interacts with it. There are a ton of Minecraft clones out there that let you build things, some of which even let you make them move but Space Engineers takes it a step further by allowing for procedural physics-based destruction.
