When the first tech demo was released for Half-Life 2 in 2003 the exciting thing about the Source engine was that objects in the virtual world had properties. Wood behaved like wood - it would burn, splinter, float etc. So, whenever a level designer used "wood" in a building or for anything else in a level, with that came all the characteristics of wood - which meant that a door, for example, could be busted through or burnt etc.
It was fantastic because until that point, everything (e.g. every door) had to be programmed separately. Suddenly, level building became much easier, and the finished product was much more representative of the real world. For the most part, however, they stopped at the environment. They didn't carry that technology over to the A.I. They continue, even now, to rely on heavily on scripting.