Essentially all physics simulations are either particle based or based on integration of differential equations (although in a computer both approaches involve a discretization which makes them somewhat computationally similar). You can consider reading through Numerical Recipes which is sort of the bible for this stuff for physicists, but it is aimed at scientific audiences with weak CS background. Something like Computer Simulation of Liquids by Allen could be a good start too. Let's be clear that the approach I'm talking about here is focused more on physical correctness: if you are a game designer it's not important that your fluid simulations are physically correct and more that it looks physically correct to a player, and there are a variety of more heuristic techniques for something like that.