Character animations will still have to be pre-defined/animated.
Take a look at a game like Wii Sports Kendo and see that it's set up like Wii Sports Boxing, complete with the missing limbs. All you see is the boken/shinai in Kendo, and the boxing gloves in Boxing.
Boxing uses pre-defined animations to determine the type of punch or move the on screen character performs, based upon the motion input being interpreted from the Remote and Nunchuk.
Kendo with M+ allows the boken to tilt, angle, move by tracking player motions, but even clumsy swings are still translated into hits if not blocked/dodged. It just allows for more precise motion tracking in addition to being able to sense change of position in space thanks to the gyroscope.
You'd have a different situation with something like Link in a Zelda game unless the game switches to a first person view mode like Wii Kendo. As a third person game, at best you could expect to see the distinction between left to right swing, right to left swing, low to high swing and high to low. Add diagonal cuts and the animations double to 8. Add high across, low sweep and you just added an additional 4 animations/swings. Add a thrust, a straight overhead down swing and you just added an additional two.
It can become as complicated as the developer wants it to, or as complicated as the animators are willing to produce animations for each possible move, down to various random panic flailing animations.
It is far easier, and far likelier that the programmers will instead translate player movements performed within preset parameters (possible translations for a simple left to right slash for example) into an onscreen animation. There would be no real free motion allowing a player to rapidly scribble with the Remote in the air to create a "wall of swords" attack.
The idea is for more precise tracking, which could just mean better translation of player movements (what they're trying to do) into onscreen animations (what their input actually makes the character do).
Boxing was a prime example of where the motion tracking of the standard remote came up short. The player could be a professional boxer throwing rapid jabs and combos, only to see their character animation failing to translate those punches into what would be actual hits in a real boxing match.