3 techniques I see are:
- Soft body physics
- Shapekeys/blendkeys
- Detailed Rigs
Soft Body physics: a basic way of doing body physics, its automatic, but the results are only basic. If you are doing it in game, there are speed limitations so the technique is extremely simplified. If you are rendering animations, theres lots of tutorials on how to do this with blender, and a lot of different techniques (you can design special 'internal spring' meshes to change the property of the simulated soft body, in a way thats more advance than just playing with setting sliders). while lots of people think it looks good, I think it still has issues and not very stylize-able. The main issue is that its limited to the resolution of the mesh. In prerendered animations this isn't an issue because you can increase the mesh quality with subdivisions before simulating (I use a combination of subivision, simulating, smothing, subdividing again, using a corrective shape key, and maybe one last subdivision to get a real clean crisp result).
Shape keys can be made in a few ways, either baking simulations, or scultping them. The trick is then to control them somehow. While corrective morphs are very common, I rarely hear anyone use them for soft body or jiggle physics. This may be because it can be rather complex and limiting. it can only adjust according to pre designed sculpts. This works good for jiggling things, such as hair, but can't handle interactions (can't poke the booty). You can try to combine this with soft body physics, but soft body physics is still very limited (assuming video game mesh)
Detailed rigs, ie jiggle bones, or bones for 'openings' that can either control the mesh directly, or affect the mesh in some way (such as shape keys to open a hole). this is the common one I see get used for erotic animations, as it allows the animator to control the soft body 'look' (its only an illusion), and allows for animations to perfectly repeat (to get the effect to repeat using acutal simualtions, you have to remove all 'energy' at the end of the animation so that the system matches the beginning of the animation (where the simulation has no energy yet)).
My preferred technique: I'll actually have breast bones (or but, or belly), but they won't control the mesh. they will be controlled by physics (simple spring mass system). each 'feature' (each boob) has two bones. I actually prefer a cleaner stylized easy to follow style, so I'll actually only use one spring mass dampener simulation (which can run in real time in games), and what I do to get a soft or 'non video' game effect is I'll copy the data, time shift it by 40% the resonance frequency of the mass spring system and use this control the second bone. the second bone controls 'secondary physical effects'. What I'll then do is make 8 sculpts. First for each direction (up down left right) that the soft mass could shift (something that would work as a resting pose, shifting the whole mass but not applying any twisting or rotation). I'll then do this again, but only do rotation. First bone controls the first set of shape keys, second bone controls the second set, so the soft body can giggle around by first moving its mass, 'then' deforming (the time delay of the simulation on bone 2 controls the 'then' part). A very basic soft body simulation can be applied on top of this effect (or the sculpting can be applied to the soft body control mesh (ie invisible balloons surrounding the breasts) ), and I've been trying to experiment with actually using a proximity or heat map to modify the normal map of the skin to make it look like small detailed depressions work (ie poking with teh finger or the shape of a hand on 'something') even though the game mesh isn't that high resolution (compared to what is needed to simulate, impossible when polygons for larger part of the bodies are bigger than a finger is wide)
that's just me spewing the first things that come to mind.
