The sense of a deformable environment applies to everything. Not only does the overall geometry deform, but things like leaves on trees and bushes will react to explosions. Toss a grenade into a clump of bushes and you'll see the leaves blown off leaving behind the bare wooden skeleton. This can make spotting enemy units hiding in foliage a lot easier. Nearly everything in the game responds to ballistics as well, so your bullets can penetrate certain materials but not others.