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Eating cake is unhealthy. ;)
You are correct. I believe all matter in the universe behaves deterministically according to the laws of physics (even those that we have not yet discovered). Not unlike the way cells in Conway's Game of Life interact with each other deterministically.
Intelligent systems are special arrangements or patterns of matter (or Life cells). Intelligent systems behave differently than non-intelligent systems (like a tennis ball), even though they still follow the same physical laws.
Tennis balls could be used to create logic gates. With enough of them, one could create a very basic (and inefficient) computer. Though the tennis balls themselves cannot make decisions, when enough of them are arranged together, they form an intelligent system that can receive inputs and give outputs.
A man actually did create a Universal Turing Machine in Life, using cells that directly obey deterministic laws.
