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.”
A GDC talk on 'Motion Matching':
The PS5 Exists.