"Breast bounce" refers to animation that depicts a woman's breasts as bouncing or jiggling in an exaggerated or unrealistic manner. It is an effect that is meant to attract attention and potentially titillate, but has also been used when parodying female sexuality.
Mai Shiranui from the Fatal Fury and The King of Fighters series is the first major female character animated with an exaggerated breast bounce - one could easily argue that the point of those frames of animation was to titillate the male audience rather than provide a reasonable facsimile of the forces of gravity and inertia on the female mammaries. That style of bounce featured quite prominently in fighting games, due to the large detailed sprites they employed relative to other genres.
Early 3D games were incapable of modelling the physics necessary to provide a bounce, jiggle or deformation. However, as 3D modeling technology evolved, this effect began to appear in particularly busty heroines such as Lara Croft and the female portions of the casts of Dead or Alive and Virtua Fighter.
Various games have employed different methods of animating the bouncing of breasts - from painstakingly done keyframe animation to crude physics models and, later, more detailed procedural physics systems that treated the breasts as soft objects of varying density rather than a set of points in space with no defined mass.
Games like Dead or Alive: Xtreme Beach Volleyball and Rumble Roses, which focus entirely on rosters of scantily clad female characters, are particularly notable for the inclusion of this tone of animation. Dead or Alive: Xtreme 2 is notable, if for nothing else, for a physics system that models each breast individually.
Though the more exaggerated examples of such animation techniques are in turn more noticable, such animations also serves as a bridge over the uncanny valley. Breasts, like any other part of human anatomy that display malleability, are not rigid structures and are just as subject to the laws of physics as hair or loose clothing.
The following is a short list of examples of more exaggerated breast bounce:
Metal Gear Solid 4: Guns of the Patriots
Shaking the SIXAXIS controller during CODEC calls with Rosemary in Metal Gear Solid 4: Guns of the Patriots will make her breasts bounce.
Ninja Gaiden Sigma 2
In Ninja Gaiden Sigma 2, shaking the PS3's SIXAXIS controller will cause the player's breasts to bounce while playing as any of the female characters.
Dead or Alive
The Dead or Alive series has adjustable breast bounce. In every Dead or Alive game released prior to Dimensions, the player can set an age in the options from 13 to 99 that determines how frequent the breasts bounce.