How is that able to be scaled down to a system with far less RAM?

Other areas.

For example maps can be bigger. Or you can walk through the level for a longer distance until you reach the next load point. Among other stuff.

They are not just aiming for graphics, but to create more expansive worlds, emotional storylines, better physics, to keep you immersed in games. They showed off the possibilities towards reaching these ends at the PS4 unveiling. Sony and Microsoft gave the third party the ability to give console games games that they've always dreams of making at high budget range, but we all know first party will truly shine with their respective setups. Next gen is going to be so badass.

Exactly and people are trying to actually defend Nintendos lack of ram. Thats no one but Nintendo's fault. It doesn't mean third parties shouldn't support them with exclusives but the Wii U fanbase will more than likely grow, but seriously, theres only so much they can do there when the true next gen consoles are actually allowing them to make the games they want. 

They just can't be done. If the baseline rises you will need all that Ram to do certain things with it. Devs often can work around a Bottleneck but sometimes its an unsolvable problem. 

Don't expect efficent use of all that Ram in the first years. But I am sure that soon games will need way more Ram than they used to because devs will try things that we haven't seen in the past. The gamedesign will be influenced by the huge amount of ram the next gen consoles will have. Developers wish always for more Ram because it means more freedom, I am very excited to see  how games will change in the next years.

And this gets to the heart of my concern.  Sure, the Wii U can do fighting games that will be on other consoles, but in other games, assuming Open World is the norm, I see you would have to get stuff like Black Ops: Declassified, which use the same IP as the other two consoles (and the PC), but a different animal, scaled back for the Wii U.

Remember the expansion pak for the N64? That helped spruce up the graphics for Rogue Squadron. Nintendo may have to do same thing with the wiiu

That is a thought I was wondering about.  Anyone know where on the Wii U, there is a place to expand memory?

Are you talking about a RAM upgrade? This won't happen unless WiiU features a very high bandwidth interface to expansion modules. If not, won't happen (and I don't think it has an expansion slot).