I still can't see it.

you would need a room without any furniture and with just a TV.

This is a projector like concept, but it projects to 4 walls. I was hoping for something like holograms.

I guess that kind of immersion is many years down the road.

This is the kind of thing you see in, "what the world will be like in 10 years" videos but which would never really work in the real world. Most people just don't have the kind of room required to make this work well.

You're thinking too hard. When you talk about perspective do you mean it would alter the projection to match your head position so say you look left at the wall lean your head forward and instead of you just looking at the same wall the image would move accordingly like you were actually leaning to look but past something. That would be pretty amazing but I fear the execution would be flawed. I'd be much happier with 360 degree gameplay a headset would provide.

EDIT: Oh and a headset could create perspective gameplay aswell with head tracking. Perhaps much more accurately too, all without the need of an ideal room for projection.

No, you wouldn't.

The reference image even shows existing furniture in the room.  You might feel it would work better with no furniture, but that's your opinion, that isn't necessarily the truth.

I think a hologram aspect comes into play with something similar to Google glasses.  Microsoft showed in it's documentation a pair of glasses that what the user would see is 3D objects projected.  I think the glasses are essentially pass-through vision.  So everything this does would still be visible but if say an object or creature was closer to you, then it would show up in the glasses.

The display is 360°, so if you looked (turned your head) left you would see what is to your left.  It doesn't change the view on your primary display.  If you turn your character, you change the view.  So if you turned left what was to your left when you looked would now be on your primary display.  Turning would change the 360° display, you physically looking in a direction wouldn't change anything.  Understand, I'm assuming the use of a game pad, wheel, flight stick or some other type of physical controller.  Functionality with Kinect would depend on the game. 

Yeah, this idea was out there several months ago when that leaked 2010 document surfaced.

While it's obviously a far, far cry from anything like the holodeck, it's still interesting that Microsoft is taking interest in what could be the first step.

This doesn't suggest you would have to.  However, the patent does suggest that some type of glasses could be used with this.  So my thoughts would be the glasses would be similar to what Google is doing, basically a pass-through where you can see beyond the interface or objects displayed within the glasses.

Yes you would and this is not an opinion, it is a fact. 

Try it for yourself:

Grab a projector and project something on a wall:  Looks ok

Grab a projector and project something right on top of your furniture, TV, sofa, wall frames, etc: looks like shit.

Imagine going on the cinema and instead of a big surface, you have a crowd, and you have to watch the movie projected on people. Such quality LOL

This is not magic, its projectors. You strictly need an empty surface for good results. That's not open to debate for how obvious it is.

Period.