Legend, there are multiple scenes in that trailer of actual gameplay, where you can see the entire stage as it would be seen in the game, and characters using their actual in-game moves. If they wanted to CG-it-up, they could have used effects much more impressive than what you see in the trailer. I have little reason to believe that those segments are not representative of the final game.
From a purely technical standpoint, these graphics aren't really incredibly impressive. But they look very beautiful because of the attention paid to detail in the art, and the fluidity of the animations. They also look like a reasonable (not huge) step up from the Gamecube and on-par with what we should expect on the Wii when developers choose to make use of its potential.
