I outlined several gaming possibilities in this thread here.
http://vgchartz.com/forum/thread.php?id=75639
And I can go ahead and tell you that Milo is not expected to be the most intelligent AI ever created. Not even the creators think that. It is the interaction capabilities that are what is neat about it. Point somewhere and make a shocked face and the boy could probably recognize what you are doing. This has to be programmed for of course, but the ability to recognize a 3D space and facial expressions adds quite a lot of immersive capabilities.







