I thought this was interesting and could help alleviate some concerns the demo wasn't real:

“It’s this crazy science fiction stuff where you take just hundreds and hundreds of animations of like walking forward and turning or whatever, and you put them in this huge bucket, and then based on what the player is trying to do or what an NPC is trying to do, it pulls from that bucket, sometimes two or three different animations, and blends them together to make this totally seamless thing,” Newman explained.

“The motion matching technique is used by other studios, but we've kind of taken it and put the Naughty Dog spin on it because responsiveness is always a huge thing for us,” Margenau added. “So we've taken it and kind of built on it and made this hybrid thing of the responsiveness and quickness of something like an Uncharted game, which is pre-existing and incorporating this very fluid, very realistic animation that still communicates those real stakes.”

“Previously all the transitions had to be done by hand, so if you slowed down or turned a corner or something, someone had to manually code ‘ok, I'm turning this corner.’ But now this system basically handles the whole thing,” Newman said.

"Honestly, when we flipped the switch on this, we all just gasped,” he continued. “I think, right now, because the whole demo looks so next gen, it's almost kind of lost in the general level of quality. But I think if you look at how Ellie moves and how the NPCs in this game move versus Last of Us 1, it’s wild.”

More here:

http://uk.ign.com/articles/2018/06/15/e3-2018-how-the-last-of-us-part-2-redesigned-combat-for-playing-as-ellie

A GDC talk on 'Motion Matching':

https://www.youtube.com/watch?v=KSTn3ePDt50

I thought this would be a hot topic.

Even if they did believe it, this tech looks interesting and looks to be the next big revolution in animation. 

I'm sure the vast majority of what we saw is genuine, but some of the finer details and perfect polish making it over would deeply impress me. Things like the way Ellie interacts with both sides of a counter while pulling an arrow out of a corpse simultaneously or the quality of facial animation in every moment of every npc are unprecedented.

Want to see the final results on TLOU.

It was what I first noticed watching the video. Animation is what brings gorgeous visuals to life. From Uncharted 1 to Last of Us 2 the improvements Naughty Dog has made is truly remarkable to behold.

The difference is Naughty Dog has been top tier the whole time.  I still see animations in games today that do not match PS3 Uncharted games.  The fact they keep pushing themselves when easily could have rested speaks to their talents and work ethic.

Funny because these are the things i believe the most in. The only thing i don't believe will carry over to the final game are the direct enemy placements and spawn timings.

Do you remember in the first TLOU where Joel finds a rifle while Sacrificing Tess ?? Yeah that animation was even more advanced than pulling an arrow out of a dude. I don't see how that was all that special. Uncharted 4 also had extremely good facial animations on enemy NPC's when you were punching them in the face and kicking them in the face.

That was scripted. You can make any scripted moment look as nice as you want. If this is scripted too, then it's nothing special. If it's dynamic, then it's unprecedented.

A few hours after I post, DF puts up their analysis.

Some of the details they pick out do make the demo seem more genuine, even the finer interactive bits like the bottle, so that's good.

The gameplay debut for the first game was a bit nicer than the final product. Tried to relocate a good video comparing the two but it's been buried by other comparison videos between the PS3 and 4 versions. The engine trailer for Uncharted 4 ran at 60fps and showed hifi elements that could not be seen in the final game. Granted, its gameplay debut was almost completely genuine, but then they also had the confidence to demo it live. This game's engine trailer looks slightly nicer to me than the recent gameplay trailer, but that's to be expected. We'll just have to wait and see which ND game it ends up taking after in advertising vs reality.