Alex,

Yes, the lava is a fluid simulation. Here's how it works:

I set up a 3D fluid container with an emitter. Then I set up the floor and the pillars.

To make the fluid collide with the floor and the pillars you just have to choose the fluid container and the geometry that you want the fluid to collide with (floor and pillars) then go to the fluid effects menu at the top of the screen, open it and choose Make Collide.

The "trick" to making the fluid into lava has to do with the incandescence settings and the color settings and also the texturing. Play with them and you'll see what I mean. I will tell you this though. In the case of the lava, think of the incandescence as being how hot the lava is. The lava is giving off light because it is so hot but as it cools down, it doesn't give off any more light and you can see the cool (black) lava floating on the surface.. How does the fluid know how lava cools down. In this case it doesn't BUT since I applied the incandescence using the Y gradient input, it just makes the lava start to "cool down" in the Y direction (up).

Here is the scene file for you to play with. It was created in Maya 6.5 .

lava

Like I said, if you want to understand better, play around with the texture settings and the color ramps for incandescence and color.