This is a funny paragraph. You say that gamers have become smarter, then immediately go back to talk about a tech demo for an engine that - despite it going to be used on both consoles - had gamers buy into the kool-aid that the PS5 will be the only console that can pull it off. The only part of the tech demo that is in question is the final one where the character flies through a canyon at high speed, but the practical implementation of that is limited anyway. The next Elder Scrolls and Witcher games won't have horses that get powered by jet engines, so SSD discussions are virtually pointless.
The tech demo will soon be moot, because people are going to care about what they can actually play. In regards to that, Microsoft has set their bar low with their third party event while Sony has set their bar high with the UE5 demo. This isn't unlike the 360 vs. PS3 generation where Microsoft suffered from the initial comparison between reality and fantasy, but when the cards had to be put on the table, it was Gears of War that impressed people while the PS3 had turned into a laughing stock for failing to deliver on its hype.
We already know that Halo Infinite and Forza 8 are supposed to be very early XSX games and the development focus was on the new console, not the old one. On the other hand, we know that most of Sony's major studios have released PS4 games from 2018 to 2020, so their arsenal is limited. At least on paper Microsoft has better preparation to get strong out of the gates next gen. Nevermind that currently the SSD is the only hardware component where the PS5 is better than the XSX, so people who care about visuals shouldn't be oblivious to that.
That's a win in their book.
How about flying on dragons? Or fast travel between locations or jumping into different characters without loading screens. There's plenty of ways to implement something like fast movement into a game creatively. GG wanted to include flight in HZD, but it was too demanding. I expect the sequel will include it.
The video will become irrelevant as soon as new content arrives. Which doesn't matter because the narrative is already established. Following the tech showcase of both systems there was talk in circles of the Xbox being more powerful and the power difference being substantial. So Sony tie the most impressive next gen graphical showcase to their less powerful system and reach a much broader audience. Playing chess while MS are playing checkers.
Putting aside that this comment fails to take into account a huge number of factors those scenarios aren't even remotely similar. Sony used bullshot trailers in 2005 to market their exclusive software, before some developers had even started rendering. UE5 is a third party engine demo running on a PS5. One running on the hardware, one not. Wishful thinking.
Out of the gates MS could definitely have stronger software. However Sony's usual approach has been to fund 2nd party developers to pad the first year or two. (Lair, HS, The Order 1186, Bloodborne) so they may have exclusive software outside of their own first party studios.
You can have the more powerful hardware, but not showcase that power.