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Originally Posted by Physics

These props exhibit reasonable accuracy in reaction to the slicing mechanic, with cloth tearing to shreds and chunks of wood tumbling to the ground, and objects regenerating following these actions in order to avoid impeding the player. However, unlike the realistic physics-driven gameplay of the similar-looking LittleBigPlanet, Puppeteer separates player control from the more robust environment physics. While the player routinely interacts with complex physics-driven elements, the core mechanics remain predictable and reliable, affording a greater degree of precision than Media Molecule's efforts.
Originally Posted by Lighting

The dynamic nature of the scenery demands a more robust lighting solution capable of reacting properly to the shifting world geometry. The demo is illuminated primarily via a collection of spotlights, which follow the player through the world projecting shadows throughout. Additional light sources, including that which illuminates your flying sidekick, appear in conjunction with the spotlights, delivering a rich visual composition. It is this high number of dynamic lights and lack of any performance dips which suggests to us that the game makes use of a fixed-cost rendering solution for its lighting, allowing for an almost unlimited number of dynamic lights.
Originally Posted by Framerate

Performance-wise, there isn't much to report - and that's a good thing. Puppeteer targets and successfully maintains 30fps with v-sync engaged. The demo runs so consistently, in fact, that there's not a single dropped frame, so we're unable to assess what happens should the renderer slip over budget. Of course, when it comes to side-scrolling action games there is no doubt that we would always prefer a smooth 60fps but, in this case, the consistent update combined with excellent motion blur still manages to produce an attractive game in motion.
Originally Posted by Summary

Puppeteer perfectly what it sets out to do: within the limits of the target hardware, the team at Japan Studio has managed to craft an ambitious, exceedingly polished experience. With such a limited sample it is difficult to determine how the engine copes with more complex set-pieces, but we have high hopes, and most importantly we are able to confirm tight, responsive controls and a stable frame-rate, eliminating two of the most significant stumbling points facing any platformer.

http://www.eurogamer.net/articles/digitalfoundry-puppeteer-demo-tech-analysis

PS. OP's text credits to GAF.