He said '10x more powerful' (I'm sure people recalled Phil Spencer mistakenly saying 3x, ooops). Made a big point about supporting used games and not requiring an Internet connection. And explained the share button functionality so that everyone can understand without even showing it in action. That, my friends, is Mark Cerny.
Although Knack doesn't look like anything special, Fallon made it look very accessible by not totally sucking at it like he usually does, and the crowd seemed to enjoy it a lot. Cerny also didn't fail to mention the hardcore titles that are coming out, saying he made Knack just so there would be something for families. "Shooters are very important to us" he said, while explaining the difference in the new controller. I think they appealed to a lot of people even if just demoing Knack. Watch Dogs will be demoed next, and most likely on a PS4. (how will Fallon play that game? it almost looks like it needs two controllers)
And they were using the DS4. They didn't make it look like you needed your own arcade to play the console.
X1 on Fallon in case you missed it: