You need to see how incredibly awesome Disney's new animated snow technology is. They created it for Frozen—their new (non-Pixar) 3D animation feature. This video presented at the latest Siggraph shows how it works:
I always marvel at the math and physics geniuses who get to make these reality-mimicking algorithms.
DISCUSSION
I'd imagine that the basic steps for making such an algorithm would always be the same... just a matter of applying more detailed information and using better computers to achieve these fantastic results.