The gist of it is the jelly object is basically made of a bunch of individual physics objects and they are connected together with a bunch of springs and some volume preserving springs. That’s what drives the underlying motion of it all. The visual part is done with a mesh distort on a sprite.
As you can see in the example it’s fairly involved. There are newer examples floating around too with various improvements and simplifications.
Edit:
Here’s a cool video that explains how similar physics can be done.
m.youtube.com/watch
Mesh distort in c3 is basically just a 2d grid that you can distort things with. Making it into other shapes requires some creativity.