Brief history of fluid solvers
In the 18th and 19th century a mathematical model was developed for fluid flows, the so-called Navier Stokes Equations.
In the middle of the 20th century, when computers started to play an important role in research and development, algorithms were developed to solve these equations, therefore allowing simulations of fluid flows. The simulations were accurate, but required enormous calculations.
In the 1990s Jos Stam developed a fluid solver based on the Navier Stokes Equations. Its purpose was not to simulate real fluid flows, but to create visual effects that look like real fluid flows. And, most important, to allow computers to calculate those effects in real-time. I believe the main ideas in his paper "Real-Time fluid Dynamics for Games" are found in any existing fluid solver on the market.
Last summer (2007) my friend Oliver W. (pixelpanic) asked me to code a simple fluid plug-in for XSI. Actually, he had been bugging me with that for over three years! Anyway, I was at his place for a few days and that's where we made the first beta version of emFluid for Softimage|XSI.
)Moderator edit: added quote tags and a link to the source - HB