If you're doing a more practical sort of game, typically you don't code things like a character's center of balance using a dynamics engine. That would be extremely difficult, especially if you're incorporating soft bodies and muscle dynamics, and would probably devote the bulk of the machine's resources just to balancing the biped, e.g.
Instead games usually apply mostly hard-coded kind of character animation, where the artist supplies the graphics and frames of animation for a skeleton when a character walks, runs, jumps, etc. There the character's sense of balance and motion are carefully made by an artist's touch rather than the result of extensive physics calculations.
The skeleton is basically a simple deformer. It works like a magnet, influencing surrounding vertices/pixels with a soft deformation. The process of determining that area of influence of a skeleton on its surrounding character is called skinning. There's nothing very realistic about it: it's made to look realistic, not to behave realistically. It's similar to the 3D mesh: a hollow surface. It's not modeling things at the level of atoms and molecules: it's made to look realistic, not to be realistic.
Forward kinematics then rotates those bones around, making parts of the character follow along. Inverse kinematics is a way of manipulating those bones in a way where you have an IK goal/effector over an IK chain. Normally you pose characters like a rigid mannequin -- if you want to make a mannequin reach for something, you have to rotate his shoulder, elbow, wrist all separately. IK lets you make that whole arm into a chain and just specify where the wrist should go, allowing the solver to rotate the elbow and shoulder automatically. That allows you to pose things more like a human person, where I can grab someone's wrist and tug on it and the rest of their arm follows.
With that artist-driven traditional approach as a solid base, where you have exceptions is when a character grabs a dynamic rope whose motion is not fixed, for example, and needs to cling on. That's when the artist animations stop and calculated character motions begin.
In such a case, you would use the character's hand grabbing the rope as an IK goal to have his entire body follow, with rotational constraints set accordingly on each joint/bone to prevent him from, say, bending his arm backwards and breaking it or rotating his head 180 degrees Exorcist-style. An unconstrained IK solver would potentially do these things, so rotational constraints prevent the solver from doing things the human body can't do while your high-level game logic is just concentrating on moving the character's hand, parented to the rope, with the IK solver to make the body follow.
A similar case is applied when a character gets hit by a shotgun, for example, and you need him to fly in the air with ragdoll physics -- same idea.
It would be very unusual to try to have a game where the character is entirely controlled by inverse kinematics targets and physics. I've seen goofy attempts at that like a funny game where your character is a drunkard and your whole goal is just to try to get him to walk home and not fall over and die.
So unless your entire goal and ambition is to try to simulate the dynamics of something as complex as a human body, I recommend starting with the traditional artist-driven approach and use those dynamics sparingly on your characters. That's also how 3D packages do it, where most of a character is keyframed by the artist but some parts at some times might be partially calculated by dynamics like the movement of her hair.
Perhaps you can work your way upwards to computing more and more automatically and having the artist do less and less manually. However, I would not start with the approach of trying to automate it all, especially unless you're a master of dynamics and inverse kinematics concepts.