I would actually like to see it work more like real world physics. Mostly just talking about air movement here, also. Obviously there's still going to need to be some exaggerations in the way it works to get the characteristic flying across the screen effect we want for the fighter. It's a video game, we can fudge on the equivalent weight values or the equivalent force or momentum values or w/e to make it work. But how it works essentially is that every character has only a weight and a drag coefficient (or air resistance constant, or w/e we choose to call it, it's based on the characters apparent surface area). The drag coefficient is the same in all directions, for simplicity. How a character moves is based on a function of their weight and any momentum applied to them, whether it be from pushing off the ground (technically a force but w/e we can make the units fit) pushing off of air (air dashes/dodges/jumps/flight/what-have-you) of from a hit. Gravity is the same for all characters, but because of air resistance upward, each character will have different actual rates of acceleration as well as terminal velocities. Characters can of course decrease their air resistance downward by fast-falling, should we choose to include that (and I see no reason not to). Hitting a character applies the momentum of the attack to them (skip the whole concept of force so we don't need to apply it over time) which translates into a speed based on their weight. How fast they slow down while in hitstun is determined by their air resistance, which produces a momentum based on their speed for each frame. This momentum is of course directly opposite the direction they are flying. High speeds yield higher rate of deceleration, and as they slow down, the rate at which they slow also decreases. How dramatic the effect is based on the character's air resistance and weight.
So take four characters for example. They will be four archetypes from smash:
an aerodynamic heavy character (Equivalent to Samus's stature) Named S
an aerodynamic light character (Equivalent to Fox's stature) Named F
a high-drag heavy character (Equivalent to Bowser's stature) Named B
a high-drag light character (Equivalent to Peach's stature) Named P
Don't think of them as how they feel in smash, but how they would operate in real life; Samus is smooth metal, more streamlined, but very heavy. Fox is also streamlined, but much lighter. Bowser is very heavy, and his size, shell, and spikes give him a large surface area and high drag. Peach his very light, and has a poofy dress that catches the air, so she has very high drag. To help reduce confusion, just think of the general shape rather than the characters themselves, and apply it more to real world physics.
When hit with an attack and affected by constant momentum:
S is heavy, so he is launched at a lower speed. Because he is also aerodynamic and his air resistance isn't strong and doesn't have a strong effect on his great weight, he doesn't slow down as quickly- his speed remains more constant until the end of hitstun than most characters. Going up, gravity decelerates him at the constant rate, but air resistance going upward doesn't have much effect because he is aerodynamic, and because his high weight reduces the momentum it applies, so his final rate of deceleration upward is the lowest of all characters. Going down, gravity isn't much inhibited by air resistance, and since he is heavy, that air resistance doesn't affect him much, so he accelerates downward very quickly if traveling under terminal velocity, and decelerates slowly if traveling over terminal velocity. His terminal velocity is also high.
F is light, so he is launched at a higher speed. He is also aerodynamic, meaning there is little air resistance, but his low weight allows him to be more affected by it than S. He slows down at a moderate rate. Going up, gravity decelerates him at the constant speed. Air resistance going up is low, but still has a moderate effect because of his low weight. His final rate of deceleration upward is rather moderate, and faster than S. Going down, gravity accelerates him at a rate, and his low air resistance is enough to act on his low weight to slow his rate of downward acceleration more than S. From under terminal velocity, he reaches it slower than S, but when traveling faster than terminal velocity, he slows down to it sooner than S. His terminal velocity will also be lower.
B is heavy, so he is launched at a lower speed. His high air resistance only affects him moderately because of his great weight, so he slows down at a rate similar to F, although for a different reason. Going up, gravity decelerates him at a constant speed, and that rate of deceleration is added to by moderate deceleration from high drag acting on high weight. Going down, when traveling under terminal velocity, gravity accelerates him at a constant rate, but less so than S because of his high drag acting on his high weight to produce moderate deceleration. Traveling over terminal velocity, the greater speed allows him to slow down to terminal velocity faster than S (about the same rate as F) because of his high drag acting on his high weight, producing a moderate effect. His terminal velocity is probably close to that of F.
P is light, so she is launched at a higher speed. However, her high air resistance affects her greatly because of her low weight, so she slows down the fastest of all characters. Going up, gravity decelerates her at a constant speed, and her high drag compounds on that greatly due to her low weight. Going down, when under terminal velocity, she speeds up to terminal velocity very slowly because her high drag strongly affects her low weight to counteract her downward momentum gained from gravity. When over terminal velocity, she slows down to it at a high rate because of the strong effect of drag. Her terminal velocity is very low.
Now that I've got all those out, here would be the effects on each character of how they play or are played against when hit.
How this affects offensive metagame against the characters:
Keep in mind that these things will be diversified and vary between characters, especially based on their movesets. But in terms of just their physical properties, the following can be appropriately extrapolated.
When S gets hit, he doesn't travel very fast to start with, but he maintains that momentum very well, even once out of hitstun, so he is one of the most difficult to combo. However, he dies earlier than other heavy characters from ringouts characters because he has a hard time slowing down. Metagame against him is likely to revolve more around ring outs for kills and shorter combos for positioning him. Because of his high velocity and quick downward acceleration, he will also be harder to juggle since he'll be able to get down to the ground quicker and because upward hits have him flying for a longer distance.
When F is high, he travels very fast to start with, but slows down at a slightly greater rate than S. Since he doesn't travel quite as far from the same launch speed (he hangs more since he slows down more quickly) he is slightly easier to combo, and slightly harder to ring out. The difference would be pretty moderate for either of those effects, though. Metagame against him wouldn't favor either ringouts or kills much more than the other, but neither alone would be as effective as ringouts are against S, or kills are against P. His fast falling and falling speeds will be lower than S, and vertical knockback doesn't send him as far or as quickly, so he'll be easier to juggle than S.
B is actually very similar to F. The main difference is that it takes more damage to send him flying than F. But when launched at the same speed (requiring more damage for this to happen to B due to his great weight counteracting knockback momentum) the trajectories of their flights are very similar, and thus offensive metagame against them is likely to be similar after the early percentages; however this character is likely to be much larger than F, so in terms of size, he will generally be easier to hit and combo.
P is like an opposite of S. When hit, she travels very quickly to start, but not for very long, as she slows down at a much greater rate than S. In fact, in many cases, she will likely be traveling very slowly, or perhaps not even at all, by the time she gets out of hitstun. She will be the easiest to combo (notice that the peach equivalent is completely opposite to peach herself in this regard). Since she slows down so quickly, metagame against her will revolve around either killing her through health depletion, since she is so easy to combo, or ringing her out at high percents. She will also be pretty easy to juggle since she will have a hard time getting back to the ground with her low falling and fast falling speeds.
Maybe if you read this you got the idea. It sounds complicated written down but really it's only based on a two character-constant values (air resistance and weight), a constant universal value (acceleration due to gravity), a variable input value (the knockback, or applied momentum of a hit) and a couple equations. Smash has three character-constant values (gravity, terminal velocity, weight), a constant universal value (launch speed deceleration), a variable input value (knockback) and of course the equations that determine trajectory. The method is actually not any more complicated than smash (maybe simpler) although the results seem more complex.My system is more consistent with reality, and more consistent internally, with less values that seem arbitrarily assigned, even if from within a reasonable range. They also produce more combo scenarios for players to consider, as some characters get knocked far initially but slow down quickly for a kind of hang, some characters don't get knocked far initially, but fly at a more constant rate, some characters are inbetween in both instances or just one. In addition, I feel this fits better in our system of allowing multiple types of wins (ring-out vs health depletion) as it asks the players to focus more on one of the other for some characters, or on both at once for others still. An additional reason for suggesting this physics system as an alternative to that of smash's is that it seems kind of silly and unnecessary to apply a character's terminal velocity to them even when they are traveling up, and to not have different characters' horizontal launch speeds decay at different rates despite P having a huge puffy dress that would catch huge amounts of wind while S is streamlined and very aerodynamic in shape and not be affected much by the medium. That silliness is why a lot of new players often feel that fox and falco are heavy, despite being light, because since their terminal velocity is applied soon after knockback as a downward speed, they appear to suffer less upward knockback, and the inverse for someone like Samus. The basics of this system will likely be more intuitive for new players (to a certain extent). Please note also that this won't completely remove the idea of "floaty" or "fast falling" characters, but will make those ideas more specific to falling (and more consistent with reality) as opposed to being relevant to any vertical momentum, as it works in smash.
Also it would be kinda fun to be able to calculate if heavy-weight hard-hitter B actually does hit like a train. We'll have closer to real world numbers to work off of.