This is Armory main problem with examples, there is no documentation 
To use them you need to smooth faces shading, otherwise each flat face will run with physics on it’s own independently from others.
Soft Body physics
- apply “Smooth faces” shading
- add “Soft Body” modifier
Cloth physics :
- apply “Smooth faces” shading , you’ll get a different physics that will look better
- add a “Cloth” modifier
I tried different shapes like cubes, spheres , cylinders, soft body and cloth just works.
