Claybook - a game from Second Order has an engine where everything has Play-Doh-like mouldable properties:
In this game, you venture into the shoes of children who breath life into the Claybook. Every section of the book moves you with special hindrances and riddles. You have earth blobs and you can transform them to various shapes keeping in mind the end goal to beat dubious circumstances. Each shape has its own particular qualities and shortcomings, some even have uncommon forces.
Claybook is a one of a kind material science driven game. Everything acts like it would be made out of genuine earth. Every last bit of the earth can be formed and shaped. Everything has matter inside it, not only an external shell. Earth can be twisted, pulverized, softened to liquid and solidified back to strong.