Many also stated that the graphics were "unimpressive", in which case I wonder; what the hell is the use of this video if its not about physics and not about graphics?
I don't get why everyone doubles over in excitement every time the Crysis builder videos appear, but nothing the PS3 renders or does makes any sense.
And how exactly is there "almost no interaction with objects"? Its almost exclusively interaction with objects it seems.

I have just watched the demo a second time. It seems more like an attempt at doing something artsy than about demonstrating an engine. There are some interactions I hadn't caught but they're very mild, and certainly nothing like I've seen in real physics demos. I'm not saying it doesn't look good, just that it doesn't seem very focused on demonstrating physics calculations.

Let's do it like this, to see if we come to some consensus. What is the part of the video where you think the most impressive physics are demonstrated?

The part where the "cloud" or whatever tears away the crates in a kind of slipstream.
Aren't these the dudes who made WallE (or whatever the new Disney movie is called)?
If we knew whether it was rendered and calculated rather than pre-rendered and programmed it would make it easier to discern its purpose.
If it is indeed calculating in realtime it is quite impressive (imo) but not so much if its not.

I liked the ducks better, lol.

You mean the part more or less in the middle of the video? The movement of the cans/crates/whatever looks very perfect to me. I think they're just following a fixed curve, not really interacting with the cloud. The same goes for the spheres shown immediately afterwards.

 No offense, but of course a DVD player can handle it if you burned it as a DVD. It's just handling pre-rendered pixels. It's not handling polygons or textures in real-time. 

Could be. Is it just me or does that robot thingy near the end really resemble a sentinel from Matrix?