In the same way that the body joint and body xyz positions are animated (parameter value varied over time along the animation timeline), the morph parameters of the pussy can be varied over time. So perhaps he first animated the thrusting dick, then added varied morph setting values for the pussy lips/hole spread amount on the same timeline, so it looks like the dick is "pushing" the pussy open.
There's no magic soft-body functions that will automate this - it would be done slowly and carefully by painstaking manual adjustments.
Note that the above is true regardless of whether Jackerman is using Daz or Blender (or other animation software). They all (as far as I have used) have a timeline view showing how the various control values change over time.
This video still frame shows the animation parameter control view in blender. Check the whole video for a quick intro as to how it works:
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