I was discussing it with a friend of mine (Timucin Ozger) about how Flowline does this. I am not sure what it's called exactly but instead of a single big or auto sizing container, it spawns new ones like adding lego blocks based on the direction the fluid takes. They communicate with each other of course.

Is this a smart technique? I never saw another 3d software doing this.

Can this be done using the built-in Houdini nodes?