Ie it is generating or loading 3d assets and animations then "filming" them as would occur in a 3d physics simulation like Roblox

It can still be doing some image generation, but big things like how the camera moves, how object permanence is done etc are mainly done through just generating them once as an asset then filming that to make the video. Of course the model is still writing the script, planning cuts and camera angles, choosing character design etc.

https://en.wikipedia.org/wiki/Machinima

And this will be known and basically accepted by mid 2024