Is it possible to create a cloth suirface in blender, like a skirt or table cloth, which drapes realistically over objects (physics) or even moves as a character walks?

(not my own work but a good illustration for the right idea)

No, not easily.

Blender has softbodies for that kinda thing

The tablecloth, yes, is a lot easier. The problem at the moment is that while softbodies can easily detect other objects and collide with them, self-collision is not yet applied, so the softbodies can move through themselves. So as long as you don’t have too much drape (i.e. it won;t touch itself as it drapes) then you’re alright.

Thanks for your input. I’ll study softbodies a bit to see how it works.