Here is a demonstration of the pussy stretching + belly budget with various insertion sizes. Note that the length of the insertion is set to be longer than the actual penis model length. This is to make the stretching effect more visible.
This is implemented with in-game animation drivers that calculates the blend shape weights and bone locations on the fly based on the insertion location, size and radius. This is not an "realistic" implementation modelling the stretching of the skin and so on. But it works fairly well for rod shaped insertions.
Note that the belly budge is not very visible when the penis size is "small" and becomes more apparent as the penis size increases. I think this is the desired effect but arguably, perhaps the belly budge should be exaggerated for "small" penises as well. Let me know what you think.