Here is the full video from the CryEngine btw:

At the end it makes mention that it was rendered in real time which is where people were getting that info from.

Its also kind of wierd because the bouncy balls look like little tea pots or something...can't tell for sure. 

basically the more money devs spend the better graphics will look. *cough* MGS4 *cough* will be amazing

wow wich one was the reality?

Just because they state that it is realtime doesn't mean that you should expect graphics like this in game for quite a while. If you take a Tripple Geforce 8800GTX set up and run a demo which has a lot of the clipping and culling pre-computed, which has no noticeable AI, and with the "physics" being animation, and rendering at 720p @30fps, you should be able to approximate the graphics the PS4 will produce.

That doesn't mean that its for sure what they did though either.

Really people put way way too much thought into this.  It looks great, they said it was real-time ...case closed.  Maybe there isn't AI to worry about and they did it on a beefy rig...but does that really matter?  At the end of the day its still an impressive tech demo and a great show of what to expect soon.

I guess what I'm saying is that its a little too cliche for me to believe they sat around and discussed the best way to decieve people and make it look far better than it actually is....particularly when this demo comes from a show where they are selling this technology to other industry experts who are going to quickly pick up on shortcomings that were promised as more then they are and ultimately hurt their ability to sell the engine far more than it will help it. 

What's the name of the song and who sings it?

P.S. And btw, the little I heard of the remake song it sounds like it might be better than the original 

Well, you are actually defining pre-rendered. If you manipulated the original real-time clip to run smoothly, you just pre-rendered. And that's what they did with the barrel-vids just how you describe (although the FPS was even lower, under 1 per second).

 Truthfully by that definition everything is pre-rendered since every frame must be rendered before it is shown in sequence....I realise that is not what you were going for but it still. 

The clearest definition is that a pre-rendered video is one in which the frames of animation are not rendered in real-time as the video is playing but rather rendered in its entirety before playback is initiated.  In this case Crytek claims at the end of the video that it was in fact rendered in real time.

i don't know....enviroments are one thing but when it come to people we are a long ways off still--i mean they just cant get the movement and the center of gravity right

"At this rate, dev's will have to deal with "the uncanny valley" pretty soon, and I don't see us getting across that in maybe a decade or so."

I don't know if the uncanny valley isn't overplayed. Yes people will notice a difference to real persons because we are good at that. But games like heavenly Sword already have AWESOME people and facial animations. You can see that its not real but it looks beautiful nevertheless.